Businesses added robust 237,000 jobs in August
Payroll processor ADP signals strong hiring for third month in row
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.