US private sector adds more jobs than expected in July

Private sector employment in the US rose more than expected in July, driven by an increase in mid-sized-business jobs, according to data released by ADP on Wednesday.

Employers added 179,000 jobs last month, beating expectations for a 170,000 jump. The June figure was revised up to show that 176,000 jobs had been added versus 172,000 previously.

Small businesses with fewer than 50 employees accounted for 61,000 of the jobs added to the economy, down from 86,000 in June.

Medium-sized businesses, with between 50 and 499 staff, added 68,000 jobs, up from last month’s 56,000.

Meanwhile, employment at large companies with 500 or more employees increased by 50,000, up from June’s 34,000.

In terms of sectors, jobs growth was not balanced. The services sector added 185,000 jobs, transport and utilities added 27,000, financial activities added 11,000 workers and professional and business added 59,000, while manufacturing made a 4,000 contribution.

On the downside, the goods-producing sector lost 6,000 jobs, as did construction.

Mark Zandi, chief economist at Moody’s Analytics, said: “Job growth remains strong, but is moderating as the economy approaches full employment. Businesses are having a more difficult time filling open job positions, which are near record highs. The nation’s biggest economic problem will soon be the lack of available workers.”

The figures came ahead of Friday's all-important non-farm payrolls report.

David Morrison, senior market strategist at SpreadCo, said: “This was good news as far as investors were concerned, but it doesn’t necessarily mean that we’re set for a strong non-farm payroll number on Friday.

“Analysts are generally wary of taking the ADP data as a heads-up for non-farm payrolls as the latter tends to be much more volatile than the ADP release. This has certainly been the case over the last few months. But the other issue is that the next Fed meeting isn’t until 20/21st September. Not only will July’s employment data be old news by then, but the market already doubts that the Fed will tighten monetary policy this year, let alone ahead of November’s presidential election.”