Private sector employment in the U.S. rose by much more than expected in the month of August, according to a report released by payroll processor Automatic Data Processing, Inc. (ADP) on Thursday, with the data likely to generate some optimism about the government report due on Friday.
ADP said private sector employment increased by 201,000 jobs in August following a revised increase of 173,000 jobs in July. Economists had expected employment to increase by about 149,000 jobs compared to the addition of 163,000 jobs originally reported for the previous month.
Joel Prakken, chairman of Macroeconomic Advisers, LLC, said "The August increase of 201,000, following a solid gain in July, supports the notion that the underlying trend in hiring has picked back up after slowing sharply during the spring."
"The August increase was well above the consensus forecast for today's release and for the official jobs number due out Friday from The Bureau of Labor Statistics," he added.
The stronger than expected job growth was largely due to a notable increase in employment in the service-providing sector, which added 185,000 jobs in August following an increase of 156,000 jobs in July.
Employment in the goods-producing sector increased by a more modest 16,000 jobs in August, with manufacturing employment rising by 3,000 jobs after an increase of 6,000 jobs in the previous month.
The report also showed strong job growth at both small and medium-size businesses, which added 99,000 jobs and 86,000 jobs, respectively. Employment at large businesses edged up by 16,000 jobs.
Prakken said, "The gain in private employment in August is strong enough to suggest that the national unemployment rate may have declined."
"Today's estimate, if matched by a similar reading on employment from the BLS on Friday, will alleviate concerns that the economy has slipped into a downturn," he added.
Friday morning, the Labor Department's Bureau of Labor Statistics is scheduled to release its closely watched monthly employment report, which includes both public and private sector jobs.
Economists expect the report to show an increase of about 125,000 jobs in August following the addition of 163,000 jobs in July. However, the unemployment rate is expected to remain unchanged at 8.3 percent.
by RTT Staff Writer
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