‘US companies create 219 000 new jobs in July’

Hiring strong despite widespread complaints of labour shortages ADP says the US economy created 219 000 new jobs in July.

THE numbers: Companies in the private sector added 219 000 new employees to their payrolls in July, showing that firms are managing to fill a record number of job openings despite growing shortages of skilled labour.

The increase in hiring was the strongest since February. Economists polled by Econoday had forecast a 173 000 increase, with estimates ranging from 150 000 to 220 000.

The number of new jobs generated in June was raised to 181 000 from 177 000, according to Automatic Data Processing. ADP estimates the level of hiring based on information collected from thousands of businesses for which it administers payrolls and benefits.

What happened: Small businesses created 52 000 jobs in July, ADP estimated. Medium-sized firms added 119 000 and large corporations filled 48 000 positions.

Big picture: The ADP estimate is meant to give investors a heads-up about the state of hiring a few days before the government’s official tally on how many new jobs are created each month. Figures from ADP and the Bureau of Labour Statistics are sometimes wildly at variance, but they usually to reflect the same trend.

The incontrovertible trend lately has been steady hiring, a low unemployment rate and rising incomes. The government on Friday is expected to report an increase of 193 000 new jobs, with unemployment falling to 3,9 percent from 4 percent. The big number for investors is wage growth. If it keeps rising, the Federal Reserve is likely to raise US interest rates higher than previously expected, making bonds more attractive relative to stocks.

What they are saying?: “The ADP survey has never been a great guide to the actual payrolls figures, but there is plenty of other evidence suggesting that jobs growth has remained strong,” said Andrew Hunter of Capital Economics.

“The ADP estimate is not a good predictor of the BLS figure, but today’s report may add a little to expectations of July job growth,” said chief economist Scott Brown of Raymond James.

Market reaction: The Dow Jones Industrial Average DJIA, +0,08 percent and the S&P 500 SPX, +0,21 percent were set to open slightly higher in Wednesday trades. The stock market has recovered nicely after a swoon in June tied to growing worries over a threat of a trade war. The Dow has climbed 5 percent since early July to reach its highest level since February. — Market Watch.