Survey: US businesses hired at steady pace in August
WASHINGTON — U.S. businesses added jobs at a steady pace last month, with construction and manufacturing showing solid gains, a private survey found.
Payroll processor ADP said Wednesday that businesses added 190,000 jobs last month, up from 177,000 in July, but below a six-month high in June of 231,000.
The figures suggest that turmoil in the financial markets and worries about faltering growth in China have not yet had much impact on the U.S. job market. The government will release its official jobs report for August on Friday. Economists forecast it will show that employers added 220,000 jobs, and the unemployment rate slipped to 5.2 percent from 5.3 percent.
The ADP survey covers only private businesses, however, and frequently diverges from the official figures.
Americans are buying homes at the fastest pace in eight years, and manufacturers are building more factories and expanding existing plants. That has encouraged construction firms to add more workers, including 17,000 last month, according to ADP.
Manufacturers added 7,000, a modest amount but an improvement from the spring when they cut jobs for three months.
Retailers, shipping firms and utilities companies added 28,000 jobs, while professional services, which includes high-paying jobs such as architects and engineers, gained 29,000.
The Federal Reserve is closely watching measures of hiring and the broader economy in the run up to its next meeting, set for Sept. 16-17. The unemployment rate is near the level the Fed considers healthy and job gains have been robust, suggesting the Fed could raise short-term interest rates at that meeting for the first time in nine years.
But recent financial market turmoil could cause the Fed to hold off until December or later. Investors are nervous about the extent of a slowdown in China's economy, and what impact it could have on the U.S. and global economies. The Dow Jones industrial average plunged about 470 points Tuesday.
Mark Zandi, chief economist at Moody's Analytics, which helps compile the ADP figures, expects the Fed will raise rates at its meeting in two weeks.
"I think the job market has satisfied their criteria of continued improvement," he said. That is a "necessary but not sufficient" step for them to raise rates, he added. The stock market will also have to stabilize and Fed officials will have to remain confident that inflation will near their target of 2 percent before officials raise rates, he said.
Growth has been steady, with the economy expanding at an annual rate of 3.7 percent in the April-June quarter. Yet inflation has been below the Fed's target of 2 percent for three years. Some officials have said they expect inflation will move closer to the target in the coming months.