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ADP report shows jobs jump, but experts say recovery remains anemic

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Private-sector employers added 163,000 jobs in July, outpacing market expectations but falling behind the growth needed to return to pre-recession levels, according to national employment data released today by Roseland-based Automatic Data Processing, which revised its June job gains down from 176,000 to 172,000.

"This was another report that indicates we're neither getting a breakout or breakdown in the labor market. It may have exceeded the consensus estimate, but it's not such a deviation from expectations that I think anybody is going to be turning cartwheels over," said Patrick J. O'Keefe, director of economic research at the Roseland office of J.H. Cohn. "We're plodding through and seeing growth at a level enough to keep unemployment from rising, but not enough to keep unemployment down."

Joel Prakken, chairman of Macroeconomic Advisers LLC, which co-authors the monthly report with ADP, said July's number is "consistent with the notion that employment has not fallen out of bed."

"Given how far away we are from full employment, the best you can say about this number is it's positive," Prakken said. "We'll need to hire 5 (million) to 7 million more people in next five to seven years to get back to full employment, so we'll need to see job growth of two to three times greater than this over several consecutive months to be moving in the right direction."

According to Prakken, July's employment gains were "spread nicely across payrolls of all sizes," breaking a trend in previous months' data where companies with 500 or more employees greatly lagged behind smaller firms in job growth.

"The pickup in large payrolls is encouraging," Prakken said. "I wouldn't put too much in one month's figure, but it's good to see this month's number against the backdrop of all-sized payrolls moving up together."

Prakken said other national economic indicators measuring GDP growth, consumer spending and personal income "have all been very disappointing," leading him to reduce his forecast for future employment growth.

"People are backing away from making any kind of long-term economic decisions in the face of fiscal uncertainty … and I think it will be reflected in modest growth in employment through the end of the year," Prakken said. "We'll be hard-pressed to match the number we reported today and last month going forward."

According to O'Keefe, uncertainty about the economy's long-term health has led employers to hire more temporary workers in the place of permanent full-time jobs, and he noted 30 percent of the total private-sector jobs added in June consisted of temporary help.

"Employers see some need for an increased amount of workers, but they're not confident that demand is going to remain in place long enough to make a real commitment," O'Keefe said. "The overall mosaic is one in which none of the indicators suggest future acceleration in job growth, but none suggest any deceleration, as well."

The report's numbers — compiled by ADP using payroll records — include only private-sector jobs. Labor will release nonfarm payroll employment results, which include government employees, on Friday.

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