Private sector adds 91,000 jobs in August

The private sector added fewer jobs in August than July with a drop in service employment, according to the ADP National Employment Report. Automatic Data Processing Inc. said nonfarm private payrolls increased by 91,000 in August on a seasonally adjusted basis. That’s down from a slightly revised 109,000 for July. The payroll giant conducts the monthly survey, which excludes federal jobs, in conjunction with Macroeconomic Advisers. Service sector jobs growth slowed to 80,000 in August from average gains of 115,000 the past two months, according to ADP. Gary Butler, chief executive of ADP, said small businesses continue to add the most new employees each month, accounting for more than half this month’s new jobs. Growth in other sectors slowed. Joel Prakken, chairman of Macroeconomic Advisers, said employment at companies with less than 500 employees rose 30,000 while large companies created just 3,000 jobs in August. He said the data suggest “the trend in employment moderated somewhat in August at a pace below what would be consistent with a stable unemployment rate.” Analysts surveyed by Econoday expected 110,000 new private-sector jobs in August with a range of estimates from 40,000 to 140,000. Paul Ashworth, chief U.S. economist at Capital Economics, said a “sub 100,000 gain would normally be considered weak but, as things stand now, it will be greeted with a sigh of relief that firms didn’t respond to the danger of a Federal government default and the turmoil in stock markets by putting all hiring plans on hold.” Ashworth expects Friday’s nonfarm payroll data from the Labor Department’s Bureau of Labor Statistics “to be a bit weaker” due to a strike by 45,000 Verizon workers last month. TrimTabs Investment Research estimates the economy added 64,000 jobs in August, down 60% from the firm’s July estimate of 161,000. “The steady decline in government stimulus is bringing to light an underlying weak economy incapable of generating enough jobs to reduce unemployment,” said Madeline Schnapp, TrimTabs director of macroeconomic research, “Worse, it appears the slowdown is accelerating, increasing the risk of recession.” Also Wednesday, Challenger, Gray & Christmas said planned job cuts by U.S. employers declined 23% to 51,104 in August from a month prior, when cuts hit a 16-month high. Job cuts at government agencies nearly doubled in August to 18,426, dominated by cuts at the federal level and mostly military jobs. The overall pace of job cuts through August is almost 3% lower than a year ago. Write to Jason Philyaw. Follow him on Twitter: @jrphilyaw