WASHINGTON: US private employers hired fewer workers than expected in June and applications for unemployment benefits last week increased for a third straight week, pointing to some loss of momentum in job growth as the labour market nears full employment.
Those signs were also evident in another report on Thursday showing growth in services industry employment slowing in June even as the sector, which accounts for more than two-thirds of the US economy, continued to expand at a healthy clip.
The moderation in job gains likely reflects difficulties by employers finding suitable workers amid an unemployment rate that is at a 16-year low. Even so, the labour market remains strong and tightening conditions could allow the Federal Reserve to raise interest rates again later this year.
“The slowdown in hiring, in our view, is a function of the difficulty in hiring workers,” said John Ryding, chief economist at RDQ Economics in New York. “Companies remain very reluctant to lay off workers and this is a continued sign of the tightness of the labour market.”
The ADP National Employment Report showed private sector payrolls increased by 158,000 jobs last month, stepping down from the 230,000 positions created in May and below economists’ expectations for a gain of 185,000. The report, jointly developed with Moody’s Analytics, came ahead of the Labor Department’s more comprehensive nonfarm payrolls report on Friday, which includes both public and private-sector employment.
While the ADP report has a spotty record predicting nonfarm payrolls, June’s modest job gains together with the modest rise in first-time applications for jobless benefits and cooling services sector employment pose a downside risk to the government’s June jobs report.
According to a Reuters survey of economists, nonfarm payrolls likely increased by 179,000 last month after May’s 138,000 gain. The unemployment rate is forecast unchanged at 4.3 per cent.
The dollar fell against a basket of currencies on the data as did prices for US Treasuries. Stocks on Wall Street were trading lower.
In a separate report, the Labor Department said initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 248,000 for the week ended July 1. It was the third straight weekly increase in claims. — Reuters
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