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Tags: adp | private | sector | jobs

ADP: Private Sector Adds 201,000 Jobs, Beating Expectations

Thursday, 06 September 2012 08:24 AM EDT

Private employers added a stronger-than-expected 201,000 jobs in August and new claims for jobless benefits fell last week to the lowest level in a month, upbeat signals for a struggling labor market.

The increase in private hiring, reported by payrolls processor ADP on Thursday, was the largest since March and easily beat economists' expectations. July's gain was revised up to 173,000 from the previously reported 163,000.

However, economists still think the government's more comprehensive employment report due on Friday will show only modest hiring during August.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

"The implications really are that employment is growing but not at a strong pace," said Sean Incremona, an economist at 4Cast in New York.

The government's job report is expected to show nonfarm payrolls rose by a modest 125,000 last month, while the unemployment rate is seen staying the same at 8.3 percent.

Analysts often refer to the ADP report to fine-tune their expectations for the payrolls numbers, though it is not always accurate in predicting the outcome.

The weak U.S. economy is center stage in the presidential election campaign and weak jobs growth has caused deep concern at the U.S. Federal Reserve.

The central bank could add more stimulus as soon as next week.

U.S. stock index futures edged higher and 30-year Treasury bonds lost a point in price following the data's release and an announcement by European Central Bank chief Mario Draghi that the institution agreed to a new bond-buying program to try to stem Europe's debt crisis.


Separately, the U.S. Labor Department said initial claims for state unemployment benefits dropped 12,000 last week to a seasonally adjusted 365,000.

It was the first drop in new claims since the week that ended August 4 and the lowest level since then as well.

Economists polled by Reuters had forecast claims dipping to 370,000 last week.

However, the four-week moving average for new claims, a better measure of labor market trends, edged up to 371,250.

A Labor Department official said there was nothing unusual in the data and no sign Hurricane Isaac affected the level of claims. The storm hit the U.S. Gulf Coast last week, disrupting business at the region's ports, airports and oil refineries.

The report has no direct bearing on Friday's employment report for August. The state of the labor market, particularly the unemployment rate, could determine whether the Federal Reserve will offer additional monetary stimulus to the economy at its September 12-13 policy meeting.

The unemployment rate has been stuck above 8 percent for more than three years.

Although housing and retail sales data suggest that economic activity picked up early in the third quarter, business spending is weakening and inflation is slowing.

But the Fed's decision on whether to take further policy action is complicated by relatively positive data including a rebound in July U.S. retail sales and a modest uptick in housing this year.

The number of planned layoffs at U.S. companies dropped for a third straight month in August, hitting a 20-month low, according to a report from consultants Challenger, Gray & Christmas Inc.

Worries about the so-called fiscal cliff in the United States — the $500 billion or so in tax hikes and government spending cuts that will kick in at the start of the year absent congressional action — and Europe's debt crisis have acted as a brake on business hiring and investment, analysts say.

The Organization for Economic Cooperation and Development on Thursday said the outlook for the Group of Seven major developed economies had darkened in recent months as the turmoil in the euro zone spread. It forecast economic growth of just 1.4 percent this year for the G-7 as a whole.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

© 2023 Thomson/Reuters. All rights reserved.

Thursday, 06 September 2012 08:24 AM
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