Private Job Growth Slows a Bit, but Service Sector Upbeat

adp employment report
Alan Diaz/AP
By Lucia Mutikani

WASHINGTON -- U.S. companies hired fewer workers than expected in August, but an acceleration in service-sector activity to a nine-year high offered assurance that the economy remained on track for a sturdy rate of growth in the third quarter.

That view was reinforced by other data Thursday showing only a slight increase in the number of Americans filing for unemployment benefits last week and a decline in the trade deficit to its lowest point in six months in July.

"The story line of growth momentum at least being sustained and at best picking up this quarter has more or less been confirmed, and this is certainly encouraging," said Millan Mulraine, deputy chief economist at TD Securities in New York.

The ADP National Employment Report showed private payrolls increased by 204,000 workers last month after rising by 212,000 in July.

While that was below economists' expectations for a gain of 220,000 jobs, it marked the fifth straight month of private sector employment gains above 200,000. The increases in payrolls also were broad-based.

The report is jointly developed with Moody's Analytics.

The data was released ahead of the government's more comprehensive employment report on Friday. Nonfarm payrolls are expected to have increased by 225,000 last month after advancing by 209,000 in July, according to a Reuters survey.

In a separate report, the Institute for Supply Management said its services index rose to 59.6 last month, which it said was the highest reading since its inception in January 2008. That compared to a reading of 58.7 in July.

A reading above 50 indicates expansion in the vast services sectors.

A subindex of service industry jobs increased solidly, which bodes well for August payrolls.

The upbeat job-market picture was also captured in another report from the Labor Department that showed initial claims for state unemployment benefits increasing by 4,000 to a seasonally adjusted 302,000 for the week ended Aug. 30, but still at levels consistent with tightening conditions.

The job market is being closely monitored for clues as to when the Federal Reserve will start tightening monetary policy, having kept its benchmark overnight lending rate near zero since December 2008.

Trade Deficit Narrows

The strength the U.S. economy has exhibited in recent months stands in sharp contrast to the euro zone, which is flirting with recession and deflation. The European Central Bank on Thursday cut interest rates to new record lows in an attempt to spur stronger activity.

The dollar rose to a 14-month high against the euro. U.S. stocks traded higher, while prices for U.S. Treasury debt fell.

In a third report, the Commerce Department said the U.S. trade deficit fell 0.6 percent to $40.5 billion in July, the smallest gap since January. June's trade deficit was revised to $40.8 billion.

Economists polled by Reuters had expected the deficit to widen to $42.2 billion from a previously reported $41.5 billion shortfall in June.

When adjusted for inflation, the deficit narrowed to $48.2 billion, the smallest gap since December 2013, from $48.9 billion in June. That could see economists raise their estimates for third-quarter gross domestic product. Third-quarter GDP growth estimates range as high as a 3.5 percent annual pace.

Trade weighed on growth in the April-June period.

Exports increased 0.9 percent to a record high of $198.0 billion in July, supported by a surge in goods, automobiles, parts and engines, as well as non-petroleum products.

Imports rebounded 0.7 percent to $238.6 billion after declining in June, a sign of underlying strength in domestic demand.

The increase in imports was driven by food and autos, which both hit record highs.

Petroleum imports declined, which saw the petroleum deficit hitting its lowest level since May 2009. A domestic energy boom has seen the United States reduce its dependence on foreign oil.

The politically sensitive trade gap with China was the highest on record in July.

-With additional reporting by Ryan Vlastelica and Caroline Valetkevitch in New York.


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36 Comments

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toosmart4u

It is almost 100% of the time it is the republicans that do the hiring in this country. Get your facts straight. It is the republicans that import workers

September 05 2014 at 4:22 AM Report abuse -1 rate up rate down Reply
nogo88

But, they failed to add it weren't legal americans threy hired, it was illegals

September 04 2014 at 10:50 PM Report abuse rate up rate down Reply
1 reply to nogo88's comment
mac2sr

It weren't? Gaaaaaaaaaaaaaawly!

September 04 2014 at 11:57 PM Report abuse rate up rate down Reply
Iselin007

The scars from this economic damage aren't going to heal because of a few crap jobs.

September 04 2014 at 10:04 PM Report abuse rate up rate down Reply
toosmart4u

The republicans are the only ones to forget bush/chaney was the start of the mess in this country, deregulation of wall street, 2 wars (nation debt increase) jobs leaving for overseas, and yes, the republicans were the start of this greed. Once again, good job President Obama, rough job cleaning up after the bush administration.

September 04 2014 at 6:20 PM Report abuse -2 rate up rate down Reply
2 replies to toosmart4u's comment
truu.liberal

The dumbest 1%ers are the only ones too dumb to know that government regulation and spending grew significantly under Bush.

No wonder you're toodumb2bfree.

September 04 2014 at 7:47 PM Report abuse +3 rate up rate down Reply
mac2sr

What clean up? And what deregulation? You're a bigger kool aid guzzling dunce than my son.

If you hated spending during the Bush administration, you must be losing sleep with obama's soending.

September 04 2014 at 8:29 PM Report abuse +3 rate up rate down Reply
lauraberish

well done President Obama....keep this ship of state afloat.

September 04 2014 at 6:09 PM Report abuse -1 rate up rate down Reply
2 replies to lauraberish's comment
bchbum63

You can't be that naive. These are part-time and underemployed additions. Firing a full time employee (thank you new health care mandate) and hiring two part-time people is COUNTER-Productive.

September 04 2014 at 6:19 PM Report abuse -1 rate up rate down Reply
1 reply to bchbum63's comment
Iselin007

Just what an older work force needs, mindless youth bossing them around and standing around tormenting their elders.

September 04 2014 at 10:10 PM Report abuse +2 rate up rate down
jrb359

Let's hear you say that when the employer mandate kicks in and people either get layed off or have their hours cut because of obamacare! But like Pelosi said, you could spend more time with your family, start a business, or take up a hobby like painting!

September 05 2014 at 6:14 AM Report abuse rate up rate down Reply
Iselin007

How come the polls show the opposite on the economy?

September 04 2014 at 3:57 PM Report abuse rate up rate down Reply
2 replies to Iselin007's comment
pgile

Polls. If the polls show 2+2 = 5, that's it, eh?

September 04 2014 at 5:06 PM Report abuse -1 rate up rate down Reply
1 reply to pgile's comment
Iselin007

About 70% think the job market stinks.

September 04 2014 at 9:45 PM Report abuse rate up rate down
truu.liberal

Mostly because the economy could, should, and would be doing much better with a better set of fiscal policies.

That doesn't mean the economy isn't improving as goon spending as a percent of GDP slowly shrinks. It only means thinking Americans realize it's still far less than optimal.

September 04 2014 at 7:50 PM Report abuse +1 rate up rate down Reply
ivyteainn

Yes, jobs created.... fast food counter people, Walmart stockers and Olive Garden servers.... big payers. Stop believing this propaganda in the news that is circulated by the very corporations impoverishing America.

September 04 2014 at 3:24 PM Report abuse +3 rate up rate down Reply
1 reply to ivyteainn's comment
truu.liberal

Cuba has no corporations to impoverish its citizens.

Perhaps you'd be more happy there.

September 04 2014 at 3:43 PM Report abuse rate up rate down Reply
2 replies to truu.liberal's comment
bchbum63

Don't be a trauma queen. Extremist stances are childish.

September 04 2014 at 6:21 PM Report abuse -1 rate up rate down
truu.liberal

You mean like dunces who think all the jobs created are fast food counter people, Walmart stockers and Olive Garden servers, and that corporations are impoverishing America?

I agree it takes a very juvenile imbecile to post such gibberish.

September 04 2014 at 7:52 PM Report abuse rate up rate down
Iselin007

How come all those service men and women are still unemployed? I know the answer. They don't have H1B visas!

September 04 2014 at 1:41 PM Report abuse -2 rate up rate down Reply
Richard

This is WONDERFUL --- more people than ever are wearing those funny hats and saying...."would you like fries with this....?"

September 04 2014 at 1:41 PM Report abuse -2 rate up rate down Reply
1 reply to Richard's comment
marlowemar

What are you expecting? Manufacturing jobs? Forget it! Those jobs started leaving the USA 40 years ago and they are never coming back.

September 04 2014 at 1:53 PM Report abuse +1 rate up rate down Reply
1 reply to marlowemar's comment
Iselin007

The average of the US labor force is nearing 40 not the kind of age anyone wants to be stuck in a crap job buggy lugging while millenials talk on their Iphones and push off work on their elders.

September 04 2014 at 9:51 PM Report abuse rate up rate down
truu.liberal

No real surprise.

After the initial disastrous explosion in government goonspending under the Panderer in Chief, which sent the unemployment rate soaring from it's already elevated levels, government mismanagement has recently been more contained. Goon spending as a percent of GDP has been on a steady decline the last three years due to the faux government shutdowns, the sequester, etc. As a result, the painful effects of the private sector austerity initially implemented by the Panderer are finally beginning to wane. And a bigger slice of the economic pie being allocated by citizens is predictably translating into more jobs and a stronger economy.

September 04 2014 at 12:34 PM Report abuse rate up rate down Reply
1 reply to truu.liberal's comment
mac2sr

Thank God the ARRA spending has ran it's course.

September 04 2014 at 8:33 PM Report abuse rate up rate down Reply
1 reply to mac2sr's comment
truu.liberal

When it comes to knuckle-dragging mouth-breathers, gridlock is your friend.

Your only friend, to be more accurate.

September 04 2014 at 9:58 PM Report abuse rate up rate down