ADP to Release Preliminary Estimate of June Employment Growth Wednesday
US employment data take centre stage Wednesday when the ADP Institute provides an initial estimate of June nonfarm payrolls. The ADP report could show the US economy added 213,000 nonfarm payrolls in June, following a gain of 179,000 the previous month.
ADP’s May estimate was well below the official payrolls figures released by the Labor Department, which showed US employers added 217,000 nonfarm jobs that month.
June is expected to mark the fifth consecutive month the US labour market added over 200,000 jobs, marking the first time the economy has reached that feat since the period September 1999-January 2000.
US employers have added a total of 924,000 nonfarm payrolls the past four months, according to the Labor Department.
Despite the increase, economists warn the US economy today is much weaker than it was at the end of 1990s. US gross domestic product – a broad measure of the total value of goods and services produced in the economy – contracted 2.9 percent annually in the first quarter. That marked the sharpest economic contraction for the US since the first quarter of 2009.
Economists expect the contraction to be only temporary. Most forecasts say the economy rebounded at an annual rate of between 3 percent and 4 percent in the second quarter.
The ADP report is expected to shed light on the official employment figures, which are due Thursday. A median estimate of economists polled by Bloomberg say the official Labor report will show the addition of 211,000 nonfarm payrolls in June, following a gain of 217,000 the previous month.
The US labour market finally returned to its pre-recession peak in May, as the economy recouped all of the jobs lost following the 2007-08 financial crisis.
The unemployment rate remained unchanged at 6.3 percent.
Labour force participation in May remained at its lowest level since the late 1970s. The participation rate, which represents the share of Americans working or actively seeking employment, was at 62.8 percent in May – down from 66.2 percent at the start of 2008.
The Federal Reserve expects the US economy to return to full employment by the end of 2016, according to Fed Bank of San Francisco President John Williams. That is also around the time when inflation is expected to return to normal.
“We’re moving towards normalization, and as the economy continues to improve, we’ll take off the cast; when it’s able to move on its own, we’ll take away the walking stick,” Williams said in a speech on Monday. “We won’t raise interest rates for some time, which is the real marker of tightening policy.”
The Federal Reserve is on pace to eliminate its record bond buying program by the fall, but probably won’t raise interest rates until the middle of 2015. Since December, the central bank has reined in its monthly bond buying program by $50 billion.
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