ADP: Private Sector Adds 253000 Jobs in May

ADP: Private Sector Adds 253000 Jobs in May

ADP: Private Sector Adds 253000 Jobs in May

Fed Governor Jerome Powell told CNBC that he expected there would be three interest rate increases in 2017.

Traders said the wait for jobs numbers on Friday may provide the dollar with some respite, and the greenback gained just over 0.2 percent against the basket of currencies used to measure its broader strength in morning trade in Europe. That's the longest streak since 1970.

The private-sector job creation figure reported Thursday by payroll firm Automatic Data Processing far exceeded analyst expectations and was well above the downwardly revised 174,000 net new positions added in April.

A fourth report by global outplacement consultancy Challenger, Gray & Christmas showed layoffs announced by US-based employers surged 41 per cent to 51,692 in May.

The ISM said its purchasing managers index inched up to 54.9 in May from 54.8 in April, with a reading above 50 indicating growth in the manufacturing sector. Economists surveyed by The Wall Street Journal expected an increase of 180,000. The manufacturing recovery remains underpinned by the energy sector as steady increases in crude oil prices boost drilling activity, fueling demand for machinery.

At Deutsche Bank, economists are looking for a gain of 235,000 jobs in April, more than consensus estimates.

The four-week moving average of continuing claims dropped 16,000 to 1.91 million, the lowest level since January 1974.

He noted the job creation was almost three times what was needed to absorb new entrants into the labor force and predicted that, "increasingly, businesses' number one challenge will be a shortage of labor".

"Two, withheld income tax receipts are tracking up close to 7% compared to a year ago, which points to rising income growth".

The ADP report, however, is not a good predictor of the private payrolls component of the employment report.

"We think it's consistent with continued progress in the economy and possibly a hike in September", said John Herrmann, director of interest rates strategy at MUFG Securities in NY.

Fed officials have indicated they are on track for a small rate hike this month if the labor market continues to show solid growth.

Shepherdson notes that this calendar quirk in May could push year-on-year earnings increases to 2.4% in May, which would be the lowest since February 2016, but expects wages would rebound in June.

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