Busi­nesses added ro­bust 237,000 jobs in Au­gust

Pay­roll pro­ces­sor ADP sig­nals strong hir­ing for third month in row

USA TODAY US Edition - - MONEY - Paul David­son

Some econ­o­mists say this week’s Au­gust jobs re­port may dis­ap­point, de­spite an en­cour­ag­ing sur­vey re­leased Wed­nes­day, be­cause of a pat­tern of weak ini­tial es­ti­mates in late sum­mer.

Pay­roll pro­ces­sor ADP said the pri­vate sec­tor added a ro­bust

237,000 jobs in Au­gust. That would ap­pear to sig­nal a third con­sec­u­tive month of strong hir­ing in the La­bor Depart­ment’s em­ploy­ment re­port Fri­day, which will be closely watched.

ADP was ex­pected to count

185,000 new jobs, ac­cord­ing to a Bloomberg sur­vey of econ­o­mists. The gov­ern­ment re­port Fri­day is pro­jected to re­port 180,000 pay­roll gains by busi­nesses and fed­eral, state and lo­cal gov­ern­ments.

ADP at­tempts to fore­cast La­bor’s pri­vate-sec­tor to­tal and gen-

The La­bor Depart­ment on Fri­day is pro­jected to re­port 180,000 pay­roll gains by busi­nesses and fed­eral, state and lo­cal gov­ern­ments.

er­ally re­flects sim­i­lar broad trends. How­ever, it of­ten varies from it sig­nif­i­cantly. For July, ADP’s es­ti­mate was 27,000 be­low the gov­ern­ment’s re­port of 205,000 pri­vate-sec­tor gains.

ADP’s Au­gust tally, how­ever, may sub­stan­tially over­shoot La- bor’s re­port. In Au­gust over the past five years, the gov­ern­ment has re­ported a slug­gish av­er­age of 146,000 job gains, ac­cord­ing to an anal­y­sis by High Fre­quency Eco­nom­ics. Over the next two re­vised es­ti­mates, those in­creases were up­graded to an av­er­age 192,000. As a re­sult, Jim O’Sul­li­van, High Fre­quency’s chief U.S. econ­o­mist, is fore­cast­ing just 160,000 pay­roll gains Fri­day.

But econ­o­mist An­drew Hunter of Cap­i­tal Eco­nom­ics says the La­bor Depart­ment’s re­cent ten­dency to ini­tially un­der­count Au­gust job gains “is prob­a­bly just noise.” He’s fore­cast­ing a healthy 200,000 em­ploy­ment gains.

A poor show­ing is un­likely to prompt the Fed­eral Re­serve to put off an an­tic­i­pated an­nounce­ment in mid-Septem­ber that it will be­gin re­duc­ing its $4.5 tril­lion port­fo­lio of as­sets. That ini­tia­tive is ex­pected to grad­u­ally push up long-term in­ter­est rates.

The Fed likely will be more fo­cused on an un­em­ploy­ment rate that could have fallen to a 16-year low of 4.2%, putting more pres­sure on it to nudge rates higher to head off an even­tual sharp rise in wages and price in­fla­tion.

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