Companies in the U.S. boosted payrolls in July by the most this year as employers grew more optimistic demand will pick up in the second half of the year.
The 200,000 increase in employment was more than projected and followed a revised 198,000 gain in June that was higher than initially estimated, according to data today from the ADP Research Institute in Roseland, New Jersey. The median forecast of 40 economists surveyed by Bloomberg called for a July advance of 180,000.
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Job gains, higher stock prices and rising home values are shoring up Americans' confidence, helping counter the effects of this year's government spending cuts and giving a boost to U.S. growth. Federal Reserve policy makers, wrapping up a two-day meeting today, are evaluating progress on growth and employment as they consider whether to trim their record monetary stimulus.
"The job market has admirably weathered the fiscal headwinds, tax increases and government spending cuts," Mark Zandi, chief economist at Moody's Analytics Inc., in West Chester, Pennsylvania, said in a statement. Moody's produces the figures with ADP. "This bodes well for the next year when those headwinds are set to fade."
Estimates in the Bloomberg survey ranged from gains of 140,000 to 215,000. June's figure was revised from a previously reported increase of 188,000.
Manufacturers, construction companies and other goods- producing industries increased payrolls by 22,000. Construction employment grew by 22,000 and factory payrolls decreased by 5,000, today's report showed. Payrolls at service providers climbed by 177,000.
Companies employing 500 or more workers added 57,000 jobs. Employment at businesses with 50 to 499 employees increased 60,000 and the smallest companies boosted payrolls by 82,000, the report showed.
ADP in October changed the method it uses to calculate its employment figures dating back to 2001. The report now is derived from a larger sample and is released jointly with Moody's Analytics.
The Labor Department may report on Aug. 2 that payrolls, excluding government jobs, climbed 195,000 in July after a 202,000 increase a month earlier, according to the Bloomberg survey median. The jobless rate fell to 7.5 percent, matching a four-year low, from 7.6 percent in June, economists projected.