U.S. private employers maintained a solid pace of hiring in August despite recent global financial market turmoil, suggesting that labor market momentum likely remains strong enough for the Federal Reserve to consider an interest rate hike this year.
The ADP National Employment Report on Wednesday 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.
“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 on Friday.
According to a Reuters survey of economists, nonfarm 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 in the event that payroll growth drops noticeably below 200,000 in Friday’s report.”