The latest data point to steady job growth, an encouraging sign ahead of Friday’s government report on June employment. The brighter hiring outlook also helped stocks end the day higher. The Dow Jones industrial average closed up 56 points.
Further job gains could lower the unemployment rate, which is still high at 7.6 percent, and help economic growth rebound in the second half of the year. If growth accelerated and unemployment fell, the Federal Reserve might start to scale back its bond purchases before the year ends.
“The labor market remains one of the healthiest parts of the economy right now,” said Ethan Harris, the global economist at Bank of America Merrill Lynch.
Economists forecast that the June jobs report will show employers added 165,000 jobs. The unemployment rate is expected to remain 7.6 percent. That’s down from 8.2 percent a year ago.
Wednesday’s reports had some economists suggesting that the June job gains could be higher than forecast.
Payroll provider ADP said businesses added 188,000 jobs in June, up from 134,000 in May and the most since February. Construction firms added 21,000 jobs, a sign the housing recovery is boosting hiring. Small businesses – those with less than 50 employees – added 84,000 jobs.
ADP’s survey has frequently diverged from the government’s figures. In three out of the past four months, it has been lower than the official figures. That could be a sign that Friday’s figure will be much higher than forecast. But it could also simply mean that ADP’s figures are “catching up” with gains reported by the Labor Department in the previous months.
The number of Americans applying for unemployment benefits fell 5,000 to a seasonally adjusted 343,000 last week, the Labor Department said in a second report. The less volatile four-week average dipped 750 to 345,500 and is 9 percent lower than a year ago.
Weekly applications for unemployment benefits are a proxy for layoffs. The current level is consistent modest but steady hiring gains.
A third report from the Institute for Supply Management points to stronger hiring by services firms in June.
A gauge of employment jumped to 54.7, up from 50.1 in May. That’s the first increase in five months and suggests services firms hired more briskly in June.
The ISM’s overall index of service-sector activity fell to 52.2 from 53.7 in May. While any reading above 50 indicates expansion, it was the lowest in more than three years. Steep drops in new orders and a measure of the business outlook lowered the index.
Despite the hiring gains, the economy is growing at a sluggish pace. It expanded at a 1.8 percent annual rate in the January-March quarter. And most analysts expect it grew at roughly the same subpar rate in the April-June quarter.