US private sector hiring accelerates in July
Hiring by US private sector employers rebounded in July to the highest in three months despite uncertainty around the US-China trade war, data on Wednesday showed.
The figures come ahead of the crucial monthly jobs report from the labour department on Friday morning in Washington and ahead of the Fed’s latest monetary policy decision later this afternoon, where the central bank is widely expected to deliver a 25 basis point rate cut.
Private payrolls increased by 156,000 in July from a revised 112,000 the previous month, payroll processor ADP said on Wednesday. That exceeded economists’ expectations for 150,000.
Large-sized businesses, classified as those with 500 or more employees, led the way creating 78,000 new jobs, while midsized companies that have between 50-499 employees hired 67,000 employees. Small business continued to show weakest hiring, with just 11,000 jobs.
“Job growth is healthy, but steadily slowing. Small businesses are suffering the brunt of the slowdown,” said Mark Zandi, economist at Moody’s. “Hampering job growth are labour shortages, lay-offs at bricks-and-mortar retailers, and fallout from weaker global trade.”
Uncertainty around the ongoing trade war between Washington and Beijing has weighed on companies’ capital spending plans and economic growth but Wednesday’s report showed companies’ continued to hire albeit at a slower pace.
“The 3 month average has slowed to just 103k vs the 6 month average of 157k, the 12 month average of 182k and which compares with the 2018 average of 219k,” noted Peter Boockvar at Bleakley Advisory Group.
While the labour market has strengthened and the unemployment rate has declined, inflation remains sluggish, leaving policymakers scratching their heads. Fed chairman Jay Powell cautioned that downbeat prices could lead to an “unhealthy dynamic” of lower interest rates and less room to act in a downturn.