BUSINESS
07/07/2011 08:30 am ET Updated Dec 06, 2017

U.S. Private Sector Adds 157K Net Jobs In June, Beating Expectations: ADP

WASHINGTON (Lucia Mutikani) - U.S. private companies hired more than double the expected number of workers in June, strengthening views the economy will pick up in the second half of 2011.

A drop in the number of Americans filing applications for unemployment benefits last week also offered hope for the labor market, although they remain too high to signal robust growth.

Payrolls processor ADP said on Thursday private sector employment increased 157,000 after a modest 36,000 gain in May, and beating economists' expectations for a 68,000 rise.

With gasoline prices falling, automakers cranking up production and the decline in house values moderating, the dark clouds over the U.S. economy are starting to lift.

While economists think the economy is pulling out of its first-half slump, they foresee only a modest recovery ahead.

"It's generally a confirmation that the weakness we saw in the May data was more in the way of a bump in the road rather than falling off into some abyss," said David Resler, chief economist at Nomura Securities International in New York.

"The soft patch will prove to be a temporary one, but that doesn't mean we'll be roaring ahead with growth."

The government had been expected to report on Friday that nonfarm payrolls increased 90,000 last month after rising only 54,000 in May, according to a Reuters survey taken last week.

However, the ADP report had some financial institutions, including BNP Paribas and Deutsche Bank, bumping up their forecasts.

"While it is just one month's number, it suggests that maybe what happened was a pause in the economic expansion and as we head into the summer months we're going to pick up some momentum," said Joel Prakken, chairman at Macroeconomic Advisers, joint producers of the ADP employment report.

Initial claims for state unemployment benefits dropped 14,000 to 418,000 last week, the Labor Department said. The decline was more than economists's expectations for a fall to 420,000.

Stocks in Wall Street rose on the data, while government bond prices fell. The dollar was down against a basket of currencies.

Separately, several U.S. retailers reported better-than-expected sales gains in June, a sign they were successful luring shoppers with discounts without undercutting revenue.

Macy's Inc, Costco Wholesale Corp, Target Corp and Gap Inc all beat Wall Street estimates.

Though jobless claims fell last week, they remained above 400,000, a level that is usually associated with a stable labor market, for a 13th straight week.

The four-week moving average of unemployment claims, a better measure of underlying trends, fell 3,000 to 424,750.

The number of people still receiving benefits under regular state programs after an initial week of aid dropped 43,000 to 3.68 million in the week ended June 25.

The number of people on emergency unemployment benefits declined 44,183 to 3.26 million in the week ended June 18, the latest week for which data is available. A total of 7.46 million people were claiming unemployment benefits during that period under all programs, down 61,327 from the prior week.

(Additional reporting by Leah Schnurr in New York)

Copyright 2011 Thomson Reuters. Click for Restrictions.