Private employment in high gear as US economy gathers speed
Print Edition
US private employers hired the most workers in six months in June and factory activity accelerated, providing fresh evidence the economy was gathering solid momentum after contracting at the start of the year.
The brightening growth outlook was also bolstered by other data yesterday showing auto sales remained strong in June and construction spending rose in May to its highest level in just over 6-1/2-years.
The recent raft of upbeat data supports views of a September interest rate hike from the Federal Reserve, although market-based forecasting tools suggest lift-off may not occur until late in the year or even in 2016.
The ADP National Employment Report showed 237,000 private-sector jobs were created in June, handily exceeding the median hope among economists surveyed by Reuters for a gain of 218,000 jobs.
That followed May’s job gains of 203,000, and June’s gain marked the third straight month of improvement since the pace of hiring had slumped to a 14-month low back in March as the economy stalled in the first quarter.
“The US job machine remains in high gear,” Mark Zandi, chief economist for Moody’s Analytics, said in a statement. “The current robust pace of job growth is double that needed to absorb the growth in the working age population.”
The report, which is jointly developed with Moody’s Analytics, came ahead of the government’s more comprehensive employment report today.
According to a Reuters survey of economists, nonfarm payrolls likely increased 230,000 jobs in June after a robust 280,000 gain in May. The unemployment rate was forecast dipping one-tenth of a percentage point back to a seven-year low of 5.4 percent.
In a separate report, the Institute for Supply Management said its national factory activity index rose to 53.5 in June, a five-month high, from a reading of 52.8 in May.
A reading above 50 indicates growth in the manufacturing sector. Last month’s rise in the ISM is a welcome development for manufacturing, which is struggling with the lingering effects of dollar strength and lower energy prices.
A gauge of new orders received by factories rose to 56.0 last month from 55.8 in May.
In a third report, the Commerce Department said construction spending added 0.8 percent to an annual rate of US$1.04 trillion, the highest level since October 2008.
The reports added to robust data on employment, consumer spending, consumer confidence and housing, in suggesting that growth was gaining steam after gross domestic product shrank at a 0.2 percent annual rate in the first quarter.
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