US employment up 177,000 in June as firms struggle to find employees

Private payrolls in the United States grew by a respectable 177,000 in June but companies are struggling to find enough new employees according to data from payroll processor ADP’s monthly employment report.

The report said that increases were led by mid-size employers with more than 50 workers, with the education and health and the leisure and hospitality sectors reporting strong gains of 46,000 and 33,000 new jobs, respectively.

US unemployment is at an 18-year low of 3.8%, with businesses struggling to find qualified workers after monthly employment increases averaged 207,000 over the first five months of 2018.

"At the current pace of job growth, if sustained, this problem is set to get much worse. These labor shortages will only intensify across all industries and company sizes,” said Mark Zandi, chief economist of Moody’s Analytics, which assists ADP with the report.

Led by the gains in education and health, service providers added 148,000 payrolls over the course of the month, which also saw the information technology industry cut 2,000 jobs.

All facets of the goods-producing sector are in the green, with natural resources & mining, construction and manufacturing jobs up by 5,000, 13,000 and 12,000 respectively.

The data comes the day before the US government releases its official monthly employment report, which economists have forecast to show a job increase of 195,000.

While this is higher than ADP’s figure, it is worth noting that the government last month reported private employers had added 218,000 jobs, while ADP’s revised figure was down at 189,000.

Andrew Hunter, analyst at Capital Economics, said: "The big picture is that labour market conditions are still unusually strong, and we expect that to keep the Fed on track to raise interest rates twice more by the end of the year."

Some have voiced concerns that a tight jobs market could put pressure on wages, in turn generating an inflation spike that might instigate a quicker pace of interest rates hikes by the Federal Reserve than markets had priced-in.