US private sector adds more jobs than expected in August - ADP

Private sector employment in the US rose more than expected in August, according to figures released on Friday by ADP.

Employers added 195,000 jobs last month versus expectations for a 149,000 increase and marking the biggest increase since April. Meanwhile, July's total of jobs added was revised down from 156,000 to 142,000.

Small businesses with fewer than 50 employees added 66,000 jobs, while medium-sized businesses with between 50 and 499 employees created an additional 77,000 jobs. Large businesses with 500 or more employees recruited an extra 52,000 people in August.

The goods-producing sector added 11,000 jobs, while the services sector added 184,000, with the biggest contribution coming from education/health services, at 58,000.

Mark Zandi, chief economist at Moody’s Analytics, said: "Businesses are holding firm on their payrolls despite the slowing economy. Hiring has moderated, but layoffs remain low. As long as this continues recession will remain at bay."

Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said: "This is the first time in the last 12 months that we have seen balanced job growth across small, medium and large-sized companies."

Economists see slower non-farm payrolls growth ahead

Paul Ashworth, chief US economist at Capital Economics, said the ADP survey illustrates that the US economy remains in relatively good shape.

"That gain was well above the 149,000 consensus forecast but, although the balance of risks presumably now lie on the upside, we still estimate that the official non-farm payroll employment figures, due out tomorrow, will show a more muted 110,000 gain.

"Looking at the ADP breakdown, manufacturing employment apparently increased by 8,000, which is a little hard to believe when manufacturing average weekly hours worked have slumped in recent months and the ISM manufacturing index dropped below the 50 mark. The real strength, however, was in the services sector, which added 184,000 jobs - education & health added 58,000, while leisure & hospitality added 42,000."

Fir his part, and despite the latest ADP number being the biggest since April, Ian Shepherdson at Pantheon Macroeconomics said it would likely turn out to be the best for some time, given how surveys of business employment were pointing to smaller gains over the subsequent months.

Shepherdson also highlighted how the key official non-farm payrolls report due out on the next day also tended to lag business employment surveys.

Nonetheless, "for now a decent August report is more likely than not," he said.

"By the same token, significantly weaker numbers over the next few months also are more likely than not."

Shepherdson was looking for a 180,000 jump in US non-farm payrolls for August (consensus: 165,000).