The U.S. economy added 172,000 private, non-farm jobs in June, according to the monthly employment report released this morning by payroll-management firm ADP and its partner Moody's Analytics. Although the seasonally adjusted number, which beat analyst expectations, represents modest growth compared to May's downward-revised gain of 168,000 jobs, the figure is down nearly 44 percent year over year (from an exceptionally high June 2015 report). The relatively positive June 2016 report comes after the Federal Reserve put its proposed rate hike on hold due to a disappointing May jobs report from the Bureau of Labor Statistics (BLS) and panic in the global markets caused by "Brexit," or Britain's vote to leave the European Union.
More than half of the payroll positions added in June occurred at businesses with fewer than 50 employees; of that group, the smallest firms, or those with fewer than 20 employees, contributed more than half of the gains.
"Today's ADP number feels like that the last several months have been temporary, and we are still in an economy that's creating a lot of jobs," Moody's Analytics chief economist Mark Zandi said in a conference call this morning. "(We are) still somewhere around 200,000 average monthly job gains that we've seen in the last five, six years."
The construction sector shed 5,000 jobs in June, its first contraction in more than five years. Manufacturing lost 21,000 jobs during the period, its fifth-consecutive month of decline. The professional and business services sector—which includes architecture and engineering firms—reported gains for the third-straight month, adding 51,000 jobs in June.
While construction's cool-off in June comes as a surprise, Zandi said the industry is expected to reverse itself and continue to improve, especially in the single-family housing market. The global turmoil caused by Brexit is expected to push down U.S mortgage rates, spurring consumer re-financing, and re-building equity in their homes. "These lower rates should be a pretty significant plus for the economy," he said.
The ADP index is typically used to gauge the monthly BLS jobs report, which will release its June numbers tomorrow. Zandi forecasts that the BLS report will rebound from its unexpectedly low May figure to around 200,000 jobs added to the U.S. economy in June.