A slew of data related to the labor market has been released on Thursday, with a pair of the reports raising some concerns about the strength of the August employment report due to be released by the Department of Labor on Friday.
While a report from Automatic Data Processing, Inc. (ADP) showed a slightly bigger than expected decrease in private sector employment in the month of August, the Labor Department's weekly employment report showed an unexpected increase in jobless claims.
The ADP report showed that non-farm private sector employment fell by 33,000 jobs in August following a revised increase of 1,000 jobs in July. Economists had expected employment to fall by 30,000 jobs compared to the increase of 9,000 jobs originally reported for the previous month.
ADP said that the drop in jobs in August continues the recent trend in employment that is consistent with an economy that is growing slowly but has not fallen into recession.
The slightly bigger than expected drop in jobs came as a decrease of 78,000 jobs in the goods-producing sector more than an offset an increase of 45,000 jobs in the service-providing sector.
A continued decrease in manufacturing jobs contributed to the decrease in jobs in the goods-producing sector, with manufacturing sector employment falling by 56,000 jobs, marking the twenty-fourth consecutive monthly decline.
ADP added that the August data suggests little lessening of the recent strain on employment in the residential construction and financial activities sectors, which are the two sectors hit hardest by recent problems in mortgage markets.
Separately, the Labor Department said that jobless claims in the week ended August 30th rose to 444,000 from the previous week's revised figure of 429,000. Economists had expected jobless claims to fall to 420,000 from the 425,000 from the originally reported for the previous week.
Despite the monthly increase, however, jobless claims remain well below the six-year high of 457,000 set in the week ended August 2nd.
At the same time, the less volatile four-week moving average edged down to 438,000 from the previous week's revised average of 441,250.
The Labor Department also said that continuing claims in the week ended August 23rd rose to 3.435 million from the preceding week's revised level of 3.429 million.
As mentioned above, the unexpected increase in weekly jobless claims may raise some concerns about the strength of the monthly employment report due to be released on Friday.
Economists expect the monthly report to show a decrease of about 75,000 jobs in August, which would mark the eighth consecutive month of job losses. The unemployment rate is expected to remain unchanged at 5.7 percent.
In other labor market-related news, the Labor Department released its revised report on productivity and unit labor costs in the second quarter, showing a bigger than expected upward revision to productivity growth along with a notable downward revision to costs.
The report showed that the pace of productivity growth in the second quarter was upwardly revised to 4.3 percent from the 2.2 percent previously reported. Economists had expected productivity growth to be revised up to about 3.5 percent.
A notable upward revision to worker output contributed to the stronger than expected productivity growth, with output growth revised to 3.4 percent from the 1.7 percent growth reported last month.
The bigger than expected upward revision to productivity growth also reflected a revision to hours worked, which showed a decrease of 0.8 percent compared to the previously reported decrease of 0.5 percent.
The Labor Department added that unit labor costs for the quarter were revised to show a decrease of 0.5 percent compared to the previously reported 1.3 percent increase. The unexpected decrease in unit labor costs may offset some of the recent concerns about the pace of inflation.
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