‘As the labor market continues to tighten that will nudge wages up, which will in turn bolster inflation.’ -Mark Zandi, Moody’s Analytics
The US private sector created less than expected jobs last month, suggesting that job creation started to cool after strong gains registered earlier. The ADP National Employment Report released on Thursday showed companies added 158K new jobs to the economy in June, following the preceding month’s downwardly revised figure of 230K and surpassing analysts’ expectations for an 185K increase. The second-weakest report within this year indicated that businesses decided to put off expansion projects until the Trump administration’s plans are realised. Moreover, experts suggested that companies would continue to face difficulties of finding skilled workers as the labour market is expected to tighten further. The report is closely followed by the Federal Reserve, which remained cautious about job creation and its impact on wage growth. Notwithstanding weak inflationary pressures, the Federal Reserve is likely to raise interest rates at least one more time in 2017 as promised. The ADP figures came out ahead of the NFP report, which is expected to show a gain of 175K new jobs, following May’s increase of 138K.
