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US companies added 281,000 jobs in June; May factory orders down

By The Associated Press
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WASHINGTON (AP) -- A private survey shows U.S. business hiring surged in June, a sign of stronger economic growth. Meanwhile, a new government report shows the number of factory orders slipped in May.

Payroll processer ADP said Wednesday that private employers added 281,000 jobs last month, up from 179,000 in the previous month.

The figure suggests the government's jobs report, to be released Thursday, could also show a significant gain from May's tally of 217,000 jobs. But the ADP numbers cover only private businesses and often diverge from the government's more comprehensive report.

Recent economic data suggests that the economy has shifted into a higher gear. Autos sold at an annual rate of 16.9 million in June, the highest rate since January 2006. New orders for manufacturers are at a six-month peak, according to the Institute for Supply Management.

"The job market is strong and it feels like it is getting stronger," said Mark Zandi, chief economist at Moody's Analytics, which calculated the job gains for ADP.

The improvement in the ADP figures occurred mostly in professional and business services, a category that includes many higher-paying jobs such as accountants and engineers, but also lower-paid temporary workers. That category gained 77,000 jobs.

Goods producers hired 51,000 workers in May, up from 31,000 the previous month.

Small businesses with fewer than 50 employees added 117,000 workers in June. That partially reflects growth in the construction industry where smaller firms tend to represent a larger share of that sector, Zandi said.

Economists forecast that the government's employment report will show that 215,000 jobs were added in June, according to a survey by FactSet. If that happens, it would be the fifth consecutive month of job additions of more than 200,000. The last time the economy experience that kind of job growth was in the 1990s during the tech boom, Zandi said.

Wage growth still remains a problem, despite the steady gains. Median household incomes remain lower than what they were in 2007, before the start of the Great Recession.

Steady job growth should cause wages to rise, but such growth could be modest. That is because many unemployed Americans left or were forced out of the jobs market during the downturn. As those workers begin to return, it increases the supply of available employees and reduced pressure on employers to increase wages.

"Slowly, but surely wage growth will accelerate going forward," said Zandi, before cautioning that "it probably won't take off."

FACTORY ORDERS

Orders to U.S. factories fell in May, ending three months of gains.

The Commerce Department reported that orders fell 0.5 percent, pulled down by falling demand for military and transportation equipment. That followed increases of 0.8 percent in April, 1.5 percent in March and 1.7 percent in February.

Excluding military hardware, factory orders rose 0.2 percent in May from April. Orders for transportation equipment fell 2.9 percent. Orders for computers and electronic equipment fell 2 percent, biggest monthly drop since December.

Orders for durable goods, meant to last three years or more, fell 0.9 percent in May. Orders for nondurable goods slipped 0.2 percent.

Factory orders were up 2.5 percent from May 2013.

U.S. factories have been busy. The Institute for Supply Management reported Tuesday that manufacturing expanded in June for the 13th straight month, though the pace of growth slowed from May.

A measure of employment showed that factories added jobs for the 12th straight month; the pace of hiring last month was the same as in May.

Manufacturers added 10,000 jobs in May as overall U.S. employers created more than 200,000 jobs for the fourth straight month, longest such stretch since 1999. The government's employment report for June comes out Thursday.

The U.S. economy shrank at a 2.9 percent annual rate from January through March. But economists blame the first-quarter drop on an unusually bitter winter and a sharp reduction in businesses' inventories. They expect economic growth to rebound to an annual pace of 3 percent or more the rest of the year, boosted by rising consumer demand and a rebound in U.S. export sales.

Economists have been worried about the fallout from slower economic growth in China. But a survey out Tuesday showed that Chinese manufacturing grew in June for the first time in six months, though the expansion was weak. HSBC Corp. said Tuesday its purchasing managers index for China rose to 50.7 from May's 49.4 on a 100-point scale. Numbers above 50 signal growth.
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