The numbers: U.S. private-sector employment increased by 692,000 in June, according to the ADP National Economic Report released Wednesday. The gain was well above forecasts from economists surveyed by the Wall Street Journal who expected a gain of 550,000 jobs.
The gain is down from the strong gain in May, where ADP estimates 886,000 workers were added to payrolls. That’s down from the initial estimate last month of 978,000.
Big picture: Economists expect a strong June employment report on Friday from the U.S. Labor Department. Economists surveyed by the Wall Street Journal see nonfarm payrolls rising by 706,000 and the unemployment rate falling to 5.6%. That would be the strongest report since March
The ADP survey has been a poor bellwether month-to-month for the government’s officials employment report since the pandemic. ADP has been stronger than the government’s tally for the past three months.
Economists are watching whether supply problems persist in the labor market.
What happened: The ADP figures showed strong gains in service jobs, especially the leisure and hospitality sector, which added 332,000 jobs. Education and health services added 123,000 jobs. Trade and transportation added 62,000.
On the goods side, construction added 47,000 while manufacturing added 19,000.
Job gains were distributed evenly by company size, with medium-sized businesses of 50-499 employees adding 236,000 jobs. Small firms added 215,000 and large companies 240,000.
What economists are saying: “The data look stronger than consensus expectations for the private sector portion of payrolls in the government report on Friday. However, the usual caveat: ADP is far from consistent in predicting changes in the Labor Department’s payroll data,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
What ADP said: “The labor market remains robust…job gains have totaled more than 3 million since the beginning of 2021,” said Nela Richardson, ADP’s chief economist.
.Market reaction: U.S. stocks DJIA SPX were set to open slightly lower on Wednesday.