A job seeker shakes hands with an employer at the Veterans On Wall Street… (Scott Eells / Bloomberg )
WASHINGTON -- The private sector created 163,000 net new jobs in July, exceeding analysts' expectations but still indicating sluggish economic growth ahead of Friday’s government unemployment report.
The figures released Wednesday by private payroll firm Automatic Data Processing Inc. showed job growth was down compared with a revised 172,000 net new private-sector jobs in June. But the July growth was above the 120,000 economists had projected.
"This increase marks 2 1/2 years of positive job growth," said Carlos A. Rodriguez, ADP’s chief executive. "Although encouraging, we'd like to see continued growth but at more robust and consistent levels.”
The ADP report is closely watched as a gauge of job growth, although it does not include public-sector employment as the government's report does.
But ADP is not always a reliable indicator. In June, the Bureau of Labor Statistics said the private sector added just 84,000 net new jobs, less than half what ADP reported.
Jonathan Basile, director of economics for Credit Suisse, noted that ADP has overshot the government's figure by an average of 58,000 jobs during the last year. Economists are projecting Friday’s report will show the economy added about 100,000 net new jobs in July, keeping unemployment at 8.2%.
But Wednesday's ADP figures were strong enough to suggest that the unemployment rate could go down, said Joel Prakken, chairman of Macroeconomic Advisers.
"Today’s estimate from ADP, if reinforced by a similar reading on employment from the BLS on Friday, will alleviate concerns that the economy has slipped into a downturn," he said.
Those fears have added pressure on Federal Reserve policymakers to do more to stimulate economic growth. The Fed could announce another round of bond-buying Wednesday after it completes its two-day policy meeting.
ADP said the service industry provided the biggest job gains in July, adding 148,000 positions, down slightly from 151,000 in June. Manufacturing employment added 6,000 net new jobs, down from 9,000 in June. The hard-hit construction industry saw job gains for the second straight month, adding 5,000 net new jobs.
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