United States private employers kept a solid pace of hiring during the month of August and contracts to buy previously owned homes increased during the month of July, indicating that the economy was regaining enough momentum for the Federal Reserve to increase interest rates during 2016. Other data on Wednesday indicated a steep change in factory activity in the Midwest during August due to shrinking order books, indicating the manufacturing sector was still hobbled by the residual effects of a robust dollar and oil price decrease.
“This should give the Fed confidence that the economy is strong enough to generate new employment and importantly, that the economy has enough forward momentum to withstand an interest rate hike,” Chris Rupkey, chief economist at MUFG Union Bank in New York, said.
The ADP National Employment Report indicated that private payrolls jumped by 177,000 jobs during August after increasing by 194,000 in July. August’s jump was in line with economists’ predictions. The services sector was the reason for the entire rise, with construction getting rid of another 2,000 jobs on top of the 5,000 positions dropped during the month of July. Manufacturing payrolls were flat after increasing by 5,000 jobs in July. The ADP report was released ahead of the government’s more comprehensive employment report for August due on Friday.
According to a survey of economists, nonfarm payrolls probably grew by 180,000 jobs during August after rising 255,000 during July. August’s anticipated decrease in job gains comes after two consecutive months of payroll increases above 250,000. Economists state that with the labor market close to full employment and the economy’s recovery from the 2007-09 recession suggesting aging, change in job growth should not be surprising. The dollar increased to a three-week high against a basket of currencies, while prices for U.S. government debt fell a bit.