Recession? What recession? US company payrolls surged by 195,000 in August, well above Wall Street estimates and at a time when fears have been growing about a looming recession, according to a report Thursday from ADP and Moody’s Analytics.
Economists surveyed by Dow Jones had been looking for a gain of just 140,000 following July’s 142,000, which was reduced downward by 14,000 from the original count. August’s growth was the best showing since the 255,000 added in April.
The numbers come amid speculation that the decade-long economic expansion is coming to an end. The New York Federal Reserve puts the chance of a recession at 39% in the next 12 months, the highest level since the Great Recession that ended in mid-2009.
“Businesses are holding firm on their payrolls despite the slowing economy,” Mark Zandi, chief economist at Moody’s, said in a statement. “Hiring has moderated, but layoffs remain low. As long as this continues recession will remain at bay.”
However, he also said that the current pace of job growth needs to continue at a time when various sectors, including manufacturing and agriculture, are falling.
“This highlights why the economy is at risk, because if job growth slows any further that means unemployment will start to rise and that will be the fodder for recession,” Zandi added in a subsequent CNBC interview.
Fully 100,000 of the new jobs came in the education and health services (58,000) and leisure and hospitality industries (42,000). Health care and social assistance was the fastest-growing sub-component, with 45,000 positions added.
In all, services accounted for 184,000 of the total, with goods-producing industries adding 11,000. Manufacturing grew by 8,000 and construction contributed 6,000, though natural resources and mining saw a reduction of 2,000. Information services saw a loss of 6,000 jobs.
Companies with 50 to 499 employees were the largest growth sector at 77,000, though small businesses grew by 66,000. Firms with more than 1,000 employees saw growth of 47,000.
The ADP/Moody’s count comes a day ahead of the more closely watched Labor Department nonfarm payrolls report. Dow Jones estimates that the report will show payroll growth of 150,000 after July’s 164,000 with the unemployment rate staying at 3.7%.
The continued job growth shows the U.S. economy “remains in relatively good shape” said Paul Ashworth, chief U.S. economist at Capital Economics, though he added that he thinks the government report will show growth of just 110,000.
Economists occasionally will use the APP/Moody’s report to tweak their estimates. On balance, the two counts have run close through 2019, with the mean, or average, monthly ADP count topping the government by 5,800, and the median, or midpoint, total undershooting the Labor Department’s tally by 16,000.