ADP Finds Private Sector Added 204,000 Jobs in August

Private sector employers added 204,000 jobs in August, including 78,000 jobs at small businesses, according to payroll giant ADP, in a further indication of a strengthening economy.

ADP’s National Employment Report found that small businesses with between one and 19 employees added 39,000 jobs, while those with between 20 and 49 employees gained another 39,000 jobs. Midsize businesses with between 50 and 499 employees gained 75,000 jobs. Large businesses with between 500 and 999 employees added 5,000 jobs, while larger companies with 1,000 employees or more added 47,000 jobs.

The goods-producing sector added 41,000 jobs in August, up from 23,000 in July, while the service sector accounted for most of the job gains, with 164,000 jobs added in August, but that was down from 190,000 jobs in July.

“August marks the fifth straight month of employment gains above 200,000, continuing an encouraging trend for the U.S. labor market,” said ADP president and CEO Carlos Rodriguez in a statement.

The professional and business services sector, which includes accounting and tax preparation along with other services, added 51,000 jobs in August, but that was down from 60,000 in July. The financial activities sector added 5,000 jobs in August, according to ADP, down nearly half from July.

The construction industry added 15,000 jobs in August, slightly above July’s job gains. The manufacturing industry added 23,000 jobs in August, the highest total in that sector since December 2012. The combined trade, transportation and utilities sector gained 28,000 jobs in August, but that was down from 43,000 in July. Franchise businesses added 21,360 jobs last month, an increase from July.

Mark Zandi, chief economist of Moody’s Analytics, which compiles the monthly national employment report with ADP, predicted that if the current pace of job growth remains over 200,000 jobs a month, the economy will be back to full employment by the end of 2016.

“The job growth, as has been the case now for the last couple to three years, is broad based,” he said in a conference call with reporters Thursday. “It’s across all industries, with about the only exception being the information industry, where there is some pressure because of the Internet. But we’re getting job creation across the board. Big companies are adding strongly to payrolls, as they have throughout the recovery, so companies with over 1,000 employees are continuing to add strongly. Small businesses, as has been the case over the last couple or three years, are now also adding significantly to jobs so the smallest companies are kicking into gear too.”

Based on data from the U.S. Bureau of Labor Statistics, job growth is also occurring across all pay scales, Zandi pointed out. “Fairly early in the recovery, the preponderance of job growth was among low-paying jobs,” he said. “Retail, leisure and hospitality, and temp jobs dominated the job growth. About two or three years ago, we started to see some growth in high-paying jobs in the tech sector, resource and mining, some types of manufacturing and financial services. Now we’re seeing it across the board, with middle-paying jobs in government and manufacturing adding consistently to payrolls.”

Unlike the case with previous economic recoveries, Zandi noted that the current recovery seems to have remarkably stable job growth. “If you go back historically and look at recoveries, it was more ‘boom bust’-like,” he said. “You would get a period of very rapid job growth and then things would cool off quite significantly. That’s not been the case this go-around. The job gains slowly accelerated.”

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