ADP Estimates U.S. Companies Added 13,000 Workers (Update3)
By Shobhana Chandra
June 30 (Bloomberg) -- Companies in the U.S. added fewer workers in June than forecast, according to data from a private report based on payrolls.
The 13,000 gain was the smallest since February and followed a revised 57,000 increase the prior month, figures from ADP Employer Services showed today. Economists surveyed by Bloomberg News had forecast a gain of 60,000, according to the median estimate.
Companies may be slow to add workers until there’s evidence the gains in demand will be sustained. Economists in a Bloomberg survey project a Labor Department report in two days will show payrolls fell this month due to a plunge in government employment of temporary workers conducting the census.
“We’re in a soft patch in the economy and employers are reluctant to hire,” said Richard DeKaser, chief economist at Washington-based Woodley Park Research, whose ADP forecast of 23,000 was closest among economists surveyed. “It suggests non- government payrolls will be quite soft, well below what’s necessary to ensure a stable economic recovery.”
Projections in the Bloomberg survey of 36 economists ranged from 23,000 to 100,000 after a previously reported 55,000 gain in May.
Stock-index futures trimmed gains after the report. Futures on the Standard & Poor’s 500 Index expiring in September rose less than 0.1 percent to 1,035.8 at 8:56 a.m. in New York.
Over the previous six reports, ADP’s initial figures were closest to the Labor Department’s first estimate of private payrolls in February, when they overestimated the drop in jobs by 2,000. The estimate was least accurate in April, when it underestimated the employment gain by 199,000.
Less Reliable
“The ADP data appear less reliable when employment trends are changing, as they are now,” Aaron Smith, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “The ADP estimate lagged the deterioration in jobs in late 2008 and lagged again as employment leveled out in the second half of last year.”
Overall payrolls fell by 115,000 in June, reflecting a drop in federal census workers as the decennial population count began to wind down, according to the Bloomberg survey median ahead of the Labor Department’s July 2 report. Private hiring, which excludes government jobs, rose for a sixth consecutive month, economists projected.
The Labor Department figures will also show the jobless rate rose to 9.8 percent this month, according to the Bloomberg survey median. Unemployment is hovering near a 26-year high of 10.1 percent in October.
Construction Down
Today’s ADP report showed a decrease of 17,000 workers in goods-producing industries including manufacturers and construction companies. Employment in construction fell by 35,000, while factories added 16,000 jobs. Service providers added 30,000 workers.
Companies employing more than 499 workers expanded their workforces by 3,000 jobs. Medium-sized businesses, with 50 to 499 employees, added 11,000 jobs and small companies decreased payrolls by 1,000, ADP said.
“The recovery in the jobs market is very, very sluggish at this point,” Joel Prakken, chairman of St. Louis-based Macroeconomic Advisers LLC, which produces the figures with ADP, said in a conference call. “There’s really no way to characterize this number other than disappointing.”
While payrolls have increased each month this year, it may take years to recoup the more than 8 million jobs lost since the recession began in December 2007, the most of any downturn in the post-World War II era.
Fed’s View
Federal Reserve policy makers this month said the labor market was “improving gradually,” and reiterated a pledge to keep the benchmark interest at a record low for an “extended period” to help nurture the recovery.
Manufacturers expanding employment include Toyota Motor Corp., the world’s largest automaker. Toyota said on June 17 it will complete a plant in Blue Springs, Mississippi, and hire 2,000 workers to begin production of Corollas by the end of next year. The company had mothballed the project 18 months ago as U.S. sales collapsed.
The ADP report is based on data from about 500,000 businesses with more than 21 million workers on payrolls. ADP began keeping records in January 2001 and started publishing its numbers in 2006.
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