US businesses added 178,000 jobs in July

U.S. businesses maintained a steady pace of hiring in July as employers remained upbeat about the direction of the economy despite legislative uncertainty in Washington.

Private-sector employers added 178,000 jobs last month, down from 191,000 in June, as the labor market continued an impressive run of tightening, according to the monthly ADP employment report released on Wednesday.

{mosads}Education, healthcare and business services experienced the largest gains last month.

The energy sector, including mining, which has been gradually improving, added 3,000 jobs.

“We have to be impressed by how well this job market is performing,” said Mark Zandi, chief economist of Moody’s Analytics.

“It feels like a machine, it’s just amazing the consistent strong race of job creation that we’ve been experiencing and continue to experience and the ADP data strongly suggests that has continued through the month of July,” he said. 

The economy expanded at a 2.6 percent annual pace in the April-June quarter after a slow start to the year, bolstering employers’ efforts to pick up hiring. 

While the job market continues its streak of nearly seven years of growth, the Republican-led Congress is struggling to push through top priorities such as an overhaul of ObamaCare and tax-reform legislation.

Lawmakers also are faced with raising the debt limit this fall and approving a government spending bill for next year, which needs to be done by Oct. 1. 

Still, the labor market keeps chugging along.

The federal government is slated to release its jobs report on Friday with forecasts of around 180,000, which would be slower than June’s initially reported 222,000.

Last month, a government report showed that the unemployment rate had fallen to 4.4 percent.

At this pace of job growth, unemployment could be at or below 4 percent by this time next year, Zandi said.

Job gains remained broad-based across company sizes and industries, with only manufacturers reducing their payrolls, by 4,000, the report said. 

The lack of wage growth suggests that slack remains in the labor market, most likely workers in groups that have been hit the hardest since the 2008 financial crisis, Zandi said. 

“We can run the economy on the hot side to bring those workers back in, but if there is slack it’s getting absorbed rapidly,” Zandi said.

Lower unemployment should spur faster wage growth. 

“That’s been a bit elusive here, but I think that will become more obvious as we make our way through the year and as unemployment continues to decline,” Zandi said. 

In a broader look at the job market, Zandi and the ADP are finding that the aging workforce “is having a significant material impact” in depressing wage and productivity growth.

Six percent of the workforce is over 65 and rising quickly. That is about double that of a decade ago with no signs of slowing, because older workers are staying employed. 

The weight of baby boomers on economic growth could be felt for another 10 to 15 years, Zandi said.