The job market got a modicum of good news today with ADP (ADP) reporting that the private sector added 42,000 jobs in July. A Bloomberg survey had expected that number to be 35,000. Private employers also added a revised 19,000 jobs in June, ADP said, up from the previously released 13,000.
Although July's gain means the private sector has added jobs for six consecutive months, the pace of gains has been modest -- an average monthly increase of just 37,000 jobs. ADP also added that there's "no evidence of acceleration" in job growth.
Separately, private placement firm Challenger, Gray & Christmas said planned layoff announcements by U.S. employers increased 6% to 41,676 in July compared to June -- the third straight monthly increase, CNN.com reported. Job cuts have also risen about 9% over the past three months. However, that's still 57% below record levels of a year ago. So far in 2010, employers have announced 339,353 job cuts, down 64% compared to the same period for 2009.
Qualified Bright Spots
ADP's July report noted that the job increases by large, medium and small businesses were zero, and 21,000 and 21,000, respectively.
In addition to the better-than-expected top-line total, another qualified bright spot in the latest report was the construction sector, which lost only 17,000 jobs in July -- the smallest monthly decline since November 2007. Even so, the number of construction jobs lost since the January 2007 peak is now 2.24 million. Also encouraging: The financial services sector lost just 1,000 jobs -- that sector's smallest decline since June 2007.
Further, the services sector continued to rebound in July, adding 63,000 jobs, while goods-producing companies lost 21,000, and manufacturing shed 6,000 jobs -- the first job loss in the manufacturing sector in six months.
Investors should monitor monthly job reports because job creation is positively correlated with corporate revenue and earning gains. And, in general, as corporate earnings go, so goes the U.S. stock market.
July's private employment report was mildly encouraging, because although the job market isn't in an a clear uptrend, conditions in the private sector don't appear to be deteriorating, and what looks like subsiding job losses in the hard-hit construction and financial services sectors also represent pleasant developments.
The 42,000 total also was better than expected, which provides modest hope heading into the more-telling monthly job statistic, containing both private and public sector job data -- the U.S. Labor Department's July nonfarm payroll report, to be released Friday, Aug. 6 at 8:30 a.m. ET. A Bloomberg survey finds that report is expected to show a gain of 100,000 jobs in the private sector, after excluding the loss of about 170,000 temporary U.S. Census jobs.
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