Washington: US private employers maintained a solid pace of hiring in August despite recent global financial market turmoil, suggesting that labour market momentum likely remains strong enough for the Federal Reserve to consider an interest rate hike this year.
The ADP National Employment Report yesterday showed private payrolls increased 190,000 last month. While that was below economists’ expectations for a gain of 201,000 jobs, it was a step-up from the 177,000 positions created in July.
In a second report, the Labor Department said non-farm productivity increased at its strongest pace in 1-1/2 years in the second quarter, keeping wage inflation subdued for now.
The government revised productivity to show it rising at a 3.3 per cent annual rate, the quickest since the fourth quarter of 2013, instead of the 1.3pc pace reported last month.
But the trend in productivity remains weak. Productivity rose 0.7pc from a year ago instead of the 0.3pc increase reported last month.
“Job growth remains strong and broad-based, except in the energy industry, which continues to shed jobs,” said Mark Zandi, chief economist of Moody’s Analytics in West Chester, Pennsylvania.
The ADP report, which is jointly developed with Moody’s Analytics, was published ahead of the government’s more comprehensive employment report to be released tomorrow.
According to a Reuters survey of
economists, non-farm payrolls likely increased by 220,000 jobs in August after rising 215,000 in July.
There is, however, a risk of a weaker number as the first print of August payrolls has tended to be weaker in the last several years before being revised higher.
But some economists were encouraged by the ADP report, which showed job gains in all sectors, except in the energy industry.
“ADP does not show the same initial under-reporting bias in the initial release of the August data as payroll data from the (government) appear to display,” said John Ryding, chief economist at RDQ Economics in New York.
“This apparent consistent trend in ADP payroll gains would reassure us that the trend in employment was little changed in August.”
The unemployment rate is forecast to tick down to 5.2pc from 5.3pc in July. The August employment report would be released less than two weeks before the Fed’s September 16-17 policy meeting.
The chances of an interest rate increase this month have been diminished by a global stock market sell-off in the wake of poor economic data from China.
In, addition, US factory activity slowed to a more than two-year low in August, with some economists citing the financial markets turbulence as a factor.