MW:Private payrolls post largest gain in five months
By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) — Private-sector job growth picked up in August, recording the largest employment gain in five months, according to data released Thursday by payrolls processor Automatic Data Processing Inc.
Private-sector payrolls rose by 201,000 in August, led by small businesses and the service-providing sector.
ADP revised July’s level to an increase of 173,000 from a prior estimate of 163,000.
“The gain in private employment in August is strong enough to suggest that the national unemployment rate may have declined,” said Joel Prakken, chairman of Macroeconomic Advisers, which produces the report for ADP.
Markets look to ADP’s report on private-sector payrolls to provide some guidance on the U.S. Labor Department’s jobs estimate, which will be released Friday and includes information on both private- and public-sector payrolls.
Stock future extended gains Thursday after the ADP report’s release.
Economists polled by MarketWatch expect the U.S. Labor Department to report Friday that nonfarm-payroll employment rose by 120,000 in August, compared with 163,000 in July. They also expect that the unemployment rate remained at 8.3%. See economic calendar.
Friday’s jobs report is an important factor for Federal Reserve officials, who have been considering whether to provide additional quantitative easing. The central bank’s next meeting is later this month, and a disappointing jobs report on Friday could increase the likelihood for QE3.
“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,” Prakken said.
Elsewhere Thursday, outplacement consultancy Challenger, Gray & Christmas reported that the number of announced layoffs fell to 32,000 in August — the lowest level since December 2010 — from 37,000 in July. Cuts announced in August were 37% lower than last year.
“Job cuts slowed significantly over the summer, but it is too early to determine whether this is a trend,” said John Challenger, chief executive. “There is a chance workers might be spared from a renewal of large-scale job cuts, but the situation beyond our borders certainly will not inspire companies to start adding workers en masse.”
Ruth Mantell is a MarketWatch reporter based in Washington.
