Private sector adds 91,000 jobs in August
By Leah Schnurr, Reuters, August 31, 2011
NEW YORK (Reuters)—The pace of U.S. private sector job growth slowed in August for the second month in a row with employers adding 91,000 positions, a report by a payrolls processor showed on Wednesday.
Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 100,000 jobs. July’s private payrolls were revised down to an increase of 109,000 from the previously reported 114,000.
August’s gain was the smallest number of private jobs added since May’s disappointingly small reading of 35,000.
The ADP figures come ahead of the U.S. government’s much more comprehensive labor market report on Friday, which includes both public and private sector employment.
Economists often refer to the ADP report to fine-tune their expectations for the payrolls numbers, though it can be erratic in predicting the outcome.
“I don’t think this was a bad number, and I don’t think it changes people’s forecasts for Friday’s employment number. A small miss is not the end of the world, and we all know ADP can be unreliable, though it’s been better lately,” said Steven Butler, director of FX trading at Scotia Capital in Toronto.
The jobs report at the end of the week is expected to show a rise in overall nonfarm payrolls of 75,000 in August, based on a Reuters poll of analysts, and a rise in private payrolls of 105,000.
Government payrolls are expected to shrink for the ninth month in a row, but the decline may not be as steep as in the past three months since 23,000 state workers in Minnesota returned to the job after a partial government shutdown.
A strike by about 45,000 Verizon Communications Inc employees is also expected to put a dent in Friday’s numbers. Neither factor affects the ADP report and Macroeconomic Advisers LLC Chairman Joel Prakken said that could cause nonfarm payrolls to be a good deal weaker than indicated by Wednesday’s data.
While fears the economy is falling back into recession have increased this month, some of the recent data has been consistent with a slow-growth scenario rather than a contraction.
Slower than expected economic growth has fueled speculation the Federal Reserve could launch another round of bond buying — known as quantitative easing — but such a move would likely face political opposition both domestically and abroad.
Markets saw little impact from the data. Wall Street opened higher open as comments from Fed officials boosted hopes of more monetary stimulus.
A separate report earlier on Wednesday showed the number of planned layoffs at U.S. firms declined in August after rising for three months in a row, but the cuts were still up sharply from a year ago amid government job losses.
Employers announced 51,114 planned job cuts, down 23 percent from 66,414 in July, according to the report from consultants Challenger, Gray & Christmas, Inc. July’s figure had been a 16-month high.
But August’s job cuts jumped compared to a year ago, rising 47 percent from 34,768. Cuts at the federal government level led the way and more are expected to come with the United States under pressure to cut federal budgets, the report said.
The Mortgage Bankers Association said on Wednesday applications for U.S. home mortgages tumbled last week as demand for refinancing sagged for the second week in a row.
The industry group said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, dropped 9.6 percent in the week ended Aug 26.
But other data on the housing market was somewhat more cheery as U.S. home prices edged up for the fourth month in a row in July, while the yearly rate of decline moderated.
CoreLogic Inc’s July home price index rose 0.8 percent from the month before. Prices declined 5.2 percent compared to last year, an improvement from June’s year-over-year decline of 6.0 percent. June’s yearly figure was revised from a decline of 6.8 percent.