ADP: Businesses added 177,000 jobs in June

Paul Davidson | USA TODAY

Show Caption Hide Caption Trump hails new U.S. jobs numbers President Donald Trump described newly released unemployment numbers as "yet one more historic milestone." U.S. employers extended a streak of solid hiring in May, adding 223,000 jobs and lowered the unemployment rate to 3.8 percent.

Job growth has been surprisingly healthy this year despite worsening worker shortages, and that trend may have continued in June.

Payroll processor ADP said Thursday businesses added 177,000 jobs in June, possibly signaling another sturdy employment increase in the government’s closely watched jobs report Friday.

Economists surveyed by Bloomberg expected ADP to count 190,000 new jobs in the private sector. They estimate the Labor Department on Friday will report 195,000 payroll gains in the public and private sectors.

Monthly employment increased 223,000 in May, and gains have averaged a robust 207,000 for the first five months of 2018, according to Labor’s figures. That’s well above economists’ forecasts considering the 3.8 percent unemployment rate, an 18-year low, is making it tough for firms to find workers.

“Businesses’ No. 1 problem is finding qualified workers," said Mark Zandi, chief economist of Moody’s Analytics, which helps ADP compile the report. “At the current pace of job growth, if sustained, this problem is set to get much worse. These labor shortages will only intensify across all industries and company sizes.”

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Industries that are hiring

Education and health care led the job gains with 46,000. Professional and business services, and leisure and hospitality each added 33,000 jobs; and trade, transportation and utilities, 24,000. Construction, which is struggling to respond to low housing supplies amid severe worker shortages, added 13,000 jobs. Manufacturers added 12,000.

Small-business hiring slows

Small businesses added 29,000 jobs; midsize companies, 80,000; and large ones, 69,000.

Small businesses have to compete with larger companies that typically offer better pay and benefits, and they’ve struggled to do so as the labor market continues to tighten.

What it means

ADP tries to predict Labor’s private-sector job gains and generally tracks similar trends but often varies from it significantly. In May, ADP reported 178,000 private-sector employment gains while Labor tallied 218,000.

Still, Ian Shepherdson, chief economist of Pantheon Macroeconomics, says the modestly disappointing ADP count has prompted him to lower his estimate for Friday’s jobs report to 170,000 from 200,000.

With the unemployment rate at 3.8 percent and likely to fall further this year, most economists expect job growth to slow. There's strong demand among employers for workers, indicating a healthy economy. There just aren't enough of them.