Job gains were the highest since February last month, beating economists’ estimates and reflecting a job market fueled by tax cuts.
Prior to the release of the monthly ADP National Employment Report, economists polled by Reuters predicted the addition of 185,000 jobs to private payrolls. The higher tally of 219,000 jobs likely shows the impact of lower corporate taxes, say ADP and Moody’s Analytics, which co-produce the report.
But Mark Zandi, chief economist for Moody’s, cautions that another policy decision could take the wind out of the market’s sails.
“The job market is booming, impacted by the deficit-financed tax cuts and increases in government spending,” says Zandi in a statement. “Tariffs have yet to materially impact jobs, but the multinational companies shed jobs last month, signaling the threat.”
Where Jobs Are Growing
“Nearly every industry posted strong gains and small business hiring picked up,” says Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.
In the goods-producing sector, manufacturing added 23,000 jobs last month, while construction added 17,000 jobs and mining added 3,000 jobs.
Service-providing industries tallied 177,000 jobs total, with gains in healthcare (+49,000 jobs), professional/business services (+47,000 jobs), leisure/hospitality (+37,000 jobs), trade/transportation/utilities (+21,000 jobs) and financial activities (+15,000 jobs).
Medium-sized businesses added the most jobs last month; employers with between 50 and 499 workers added 119,000 positions. Small businesses with fewer than 50 employees added 52,000 jobs, while large businesses with 500 or more employees added 48,000 jobs.
Economists predict that Friday’s report from the Labor Department will show the addition of 190,000 jobs last month to non-farm payrolls. The monthly Employment Situation Summary will also offer the updated unemployment rate and data on wage growth for the month.
Despite the soaring job market, wage growth has been slow. The PayScale Index, which measures the change in wages for employed U.S. workers, indicates that wages declined 0.9 percent from Q1 to Q2 2018, while the buying power of those wages is now 9.3 percent lower than in 2006.
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