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ADP employment report indicates most robust job growth in five months

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Though talks of another recession cropped up in the spring amid disconcerting national job growth, August employment data released today by Roseland-based Automatic Data Processing surpassed market expectations, as private-sector employers added 201,000 jobs — the most robust job growth in five months.

Joel Prakken, chairman of Macroeconomic Advisers LLC, which co-authors the monthly report, said August's number is a "gradual restrengthening of employment gains," though he noted it shows the economy "still has a very long way to go before we can characterize the labor market as substantially healed."

“Even increases of 200,000 jobs a month — while it’s a lot better than what we saw in the spring — is really not adequate to put unemployment on a sustained downward track ... or generate robust gains in employment,” Prakken said. “We need to see a month-after-month trend to be sure we’re back on track. One month’s data does not make much of a takeaway story. Though given our forecast for GDP growth, we’re not looking at a further sharp acceleration in employment over the coming months.”

Still, Prakken said the month’s job gains — coupled with the drop in unemployment claims reported today by the U.S Department of Labor — gives economists hope that “the economy has skirted a recession,” and it’s “encouraging that employment expanded across payrolls of all sizes and across sectors there were gains, as well.”

In August, firms with 500 or more workers added 16,000 jobs, midsize companies with 50 to 499 workers added 86,000 jobs and small businesses with fewer than 50 workers added 99,000 jobs.

While service-producing industries led payroll growth with 185,000 jobs, the goods-producing sector added 16,000 jobs, and construction and manufacturing firms added a total of 13,000 jobs, despite weak industry data released earlier this week.

Joseph Seneca, an economist at the Rutgers University Bloustein School of Planning and Public Policy, said “even though we’re still below the usual trend for a recovery, I think this number suggests maybe the economy is picking up strength in the third quarter.”

“The latest data we have from (the Bureau of Labor Statistics) from July 2011 through July 2012 shows a gain of 1.9 million private-sector jobs, and that’s a solid year, even considering we have a long backlog of unemployment to work off,” Seneca said. “Assuming BLS’ August number comes close to ADP’s, it looks like job growth will be even stronger than 2 million.”

Though New Jersey employers shed 12,000 jobs in July as the national economy added 172,000 jobs, Seneca said he expects the state’s businesses to increase their payrolls in August if ADP’s job number holds up to Labor’s nonfarm payroll employment results, which will be released Friday.

“New Jersey’s numbers have really been rollercoastering off of the national numbers,” Seneca said. “But certainly if there are two good months in a row for the nation, it should echo in New Jersey in August.”

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