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Published: Fri, June 02, 2017
Economy | By Melissa Porter

Private Survey: Companies added 253000 jobs in May

Private Survey: Companies added 253000 jobs in May

US private employers added 253,000 jobs in May, above economists' expectations, a report by a payrolls processor showed on Thursday. He notes that the current pace is almost three times the rate of growth of the size of the labor market.

USA private employers stepped up hiring in May, signaling that the labor market was rapidly tightening amid a firming economy, which could encourage the Federal Reserve to raise interest rates later this month.

Echoing the Federal Reserve's own survey, Zandi said, "Increasingly, businesses´ number one challenge will be a shortage of labor".

Research from the San Francisco Fed published previous year indicated that somewhere between 50,000 and 110,000 jobs per month would likely be needed to sustain labor market growth. The ADP National Employment Report far exceeded those expectations, reflecting 253,000 jobs added. "This may be an indicator of broader strength in the workforce since these services are relied on by many industries".

It was an unusually strong month on the goods-producing side as well.

Although hiring levels have fluctuated this year, they are nonetheless much stronger than in the second half of last year.

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Private Survey: Companies added 253000 jobs in May

The Fed said on Wednesday in its Beige Book report of anecdotal information on business activity collected from contacts nationwide that labor markets continued to tighten from early April through late May. These comments were echoed across the country.

The report comes amid a growing chorus of economists who doubt the Trump administration can achieve its goal of 3 percent annual GDP growth in part because the labor market is reaching full employment. Small businesses with fewer than 50 employees added 83,000 jobs, while medium-sized businesses with 50-499 employees added 113,000.

Construction added 37,000 as the building season kicks into full gear, while manufacturing grew by 8,000 and there were 3,000 new mining jobs.

The service-providing sector as a whole added 205,000 jobs last month, with gains concentrated in professional/business services (88,000 jobs), trade/transportation/utilities (58,000 jobs), education/health services (54,000 jobs), and financial activities (7,000 jobs).

The services sector continues to dominate hiring in America. Fed Governor Jerome Powell, an influential policymaker, told CNBC that he expects three rate hikes this year. "The ADP numbers were good today and often times, but not always, they are a good indication of the monthly jobs data", said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

Or as Neil Dutta, an economist at Renaissance Macro, asked rhetorically on Thursday after ADP's number: "Where are these people coming from?"

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