According to a private survey by the payroll services company ADP, American businesses added 176,000 new jobs to the economy in June. That is a welcome-though-moderate increase from the 136,000 reported in the previous month.
Job growth surpasses expectations
Economists had predicted that only 95,000 new jobs would be added in June. The ADP report is good news, as it surpasses expectations. It is yet another indication that the job market is improving, albeit very slowly.
Medium-sized and small business added 94 percent of June’s job growth, says ADP. The manufacturing sector added 4,000 jobs in June. Financial services jobs grew by 11,000. The service industry increased the number of payrolls by 16,000 jobs.
Labor Dept. report due Friday
Government jobs are not included in ADP’s report, however. On Friday the Labor Department will release its more comprehensive survey of job growth for June.
Recent decline in job additions
The Labor Department’s figures were encouraging from December to February, with 250,000 or more jobs added each month. Since then, the numbers have dropped off sharply, culminating with May’s dismal report of 69,000 jobs.
Economists have cited the exceptionally warm winter as the reason behind decreasing payroll additions in the last several months. However, worries over the European financial slump and the slowing of China’s economy are also well-recognized factors.
Economists cautiously optimistic
Some experts, however, warn of taking the ADP report to heart. In the past, it has often deviated significantly from the Labor Department’s statistics. The Labor Department’s 69,000 for May is just over half of the figure presented by ADP for the month.
Barclays economist Michael Gapen said:
“We look ahead to the coming week’s reports to see if this is an aberration relative to the recent flattening of initial claims or the beginning of a new downward trend.”
Economy and re-election
If the job market continues to improve and unemployment figures begin to drop, it would be very good news for Barack Obama’s re-election campaign. Many believes the election hinges on the state of the economy come November.