U.S. private payrolls increased more than expected in June as small businesses ramped up hiring, and fewer Americans applied for unemployment benefits last week, suggesting a rebound in job growth after May’s paltry gains.
Thursday’s reports underscored the economy’s strength and supported views that the United States would weather the impact of last month’s British referendum to leave the European Union.
“The labor market does not seem to be faltering. The apparent willingness of small business owners to bring on new workers is a clear sign that the economy is moving forward solidly,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.
The ADP National Employment Report showed private employers hired 172,000 workers in June, beating market expectations for a 159,000 gain. Private payrolls rose 168,000 in May. Last month, small businesses hired 95,000 workers, up from 84,000 in May.
The services sector added 208,000 jobs last month, but manufacturing and construction lost a combined 26,000 positions.
The ADP report, which is jointly developed with Moody’s Analytics, was published ahead of the government’s more comprehensive employment report for June due on Friday.
Though the ADP report is not considered a reliable predictor of non-farm payrolls because of differences in methodology, economists say it, on the margin, suggested a pickup in overall employment growth.
The ADP report is not affected by strikes and therefore did not account for the return of 35,100 Verizon workers who were excluded from the non-farm payrolls count in May while on a month-long strike. Those workers are expected to boost employment in June.
“Adjusting for the strike, the ADP report suggests that the employment report’s private payroll count should be up 207,000,” said Daniel Silver, an economist at JPMorgan in New York.
“That said, the ADP and the government’s employment data do not always align very well.”