A loss of jobs raises the risk that consumer spending, the largest part of the economy, will retrench and halt the recovery. A Labor Department report in two days will show companies added 42,000 workers last month, economists projected.
Over the previous six reports, ADP’s initial figures were closest to the Labor Department’s first estimate of private payrolls in February, when they overestimated the drop in jobs by 2,000. The estimate was least accurate in April, when it underestimated the employment gain by 199,000.
Overall payrolls probably fell by about 100,000 in August, reflecting a drop in federal census workers as the decennial population count began to wind down, according to the Bloomberg survey median ahead of the Labor Department’s Sept. 3 report.
After boosting payrolls by 200,000 workers on average in March and April, companies scaled back the pace of hiring to an average 51,000 the following three months. Unemployment is hovering near a 26-year high of 10.1 percent in October.
Today’s ADP report showed a decrease of 40,000 workers in goods-producing industries including manufacturers and construction companies. Factories subtracted 6,000 jobs. Service providers added 30,000 workers.
Companies employing more than 499 workers boosted payrolls by 1,000 in August. Medium-sized businesses, with 50 to 499 employees, subtracted 5,000 and small companies decreased payrolls by 6,000, ADP said.
While private payrolls have increased each month this year, it may take years to recoup the more than 8 million jobs lost since the recession began in December 2007, the most of any downturn in the post-World War II era.
The ADP report is based on data from about 500,000 businesses with more than 21 million workers on payrolls.