Automated Data Processing reported Thursday that the U.S. private sector produced a seasonally adjusted 176,000 jobs in June, significantly more than had been forecast by experts surveyed beforehand. Meanwhile, first-time claims for unemployment benefits fell to their lowest level in six weeks. That, too, was a surprise to analysts.
The ADP report could be an indication that Friday’s government job survey will show considerably better than expected after three months of weak reports. Indeed, many analysts expected a bleak report well below last month’s, and the consensus was for about 95,000 new jobs:
Employment in the private, service-providing sector rose 160,000 in June, after rising a revised 137,000 in May. Employment in the private, goods-producing sector added 16,000 jobs in June. [...]
Construction employment rose by 8,000 jobs, more than reversing the declines of the two previous months. The acceleration of employment since April does lend credence to the argument that unseasonably warm weather boosted employment during the winter months, with a “payback” spread over April and May.
The financial services sector added 11,000 jobs from May to June, extending this sector’s consecutive advances to eleven months.
For the week ending June 30, the Department of Labor reported, seasonally adjusted initial claims fell to 374,000, a drop of 14,000 from the previous week’s revised number of 388,000. Last year at this time, first-time claims were 422,000. The four-week moving average, which analysts prefer because it flattens volatility in the weekly numbers, was 385,750, a decrease of 1,500 from the previous week’s revised average of 387,250.
For all programs, including the federal emergency extensions in states with the highest unemployment, the total number of people claiming benefits for the week ending June 16 was 5,869,607, a decrease of 20,439 from the previous week. That number has been steadily dropping, with occasional upward blips, as unemployed Americans either find jobs in the sluggishly growing economy or as they exhaust their benefits.
Tens of thousands of Americans have seen their benefits prematurely cut off since February when Congress made a budget deal that includes reductions in the duration an out-of-work person can collect.
In the highest unemployment states, benefits will soon be available for only 73 weeks instead of 99, as they previously were. In low-unemployment states, the available of extended benefits will drop to 40 by September.
Although the claims data indicated improvement, it is still elevated significantly from where it was a few months ago, indicating that job growth will continue at a low level.
Even if the report Friday from the Bureau of Labor Statistics matches the ADP report, the number of new jobs will still be below the number needed for healthy growth. About 90,000 new jobs a month are required just to absorb new entries into the working-age population, according to the Economic Policy Institute.