Private employers add 188,000 jobs in June

Paul Davidson | USA TODAY

Businesses added a better-than-expected 188,000 jobs in June, payroll processor ADP said Wednesday,as the labor market continued to largely shrug off substantial federal budget cuts and tax increases.

Economists' median forecast had ADP reporting 160,000 job gains for last month.

"The job market continues to gracefully navigate through the strongly blowing fiscal headwinds," said Mark Zandi, chief economist of Moody's Analytics, which helps prepare the ADP report.

Small businesses added 84,000 jobs, midsize ones, 55,000 and large companies, 49,000, ADP said.

Trade, transportation and utilities led job gains with 43,000, followed by professional and business services, with 40,000. Construction firms added 21,000 jobs. Manufacturers, which are still feeling the effects of a eurozone recession, added just 1,000.

The ADP report is closely watched as a possible foreshadowing of the Labor Department's employment survey this Friday. But while ADP reflects broad trends in the job market, it has had mixed success in forecasting Labor's tally.

ADP, for example, said the private sector added 135,000 jobs in January, while Labor's estimate was 178,000. Total payroll additions were 175,000, as federal, state and local governments cut 3,000 jobs.

The economy lately has been showing some effects from about $85 billion in across-the-board federal spending cuts that took effect March 1 and a recent payroll tax increase for working Americans. Measures of consumer spending and manufacturing activity have dipped. And last week, the government said the economy grew at an annual rate of just 1.8% in the first quarter, below its previous estimate of 2.4%.

Monthly job growth slowed to an average 155,000 from March through May, vs. 233,000 the three previous months.

The economy is expected to strengthen in the second half of the year as the housing recovery continues to juice the private sector.