U.S. Growth Picture a Little Brighter with Jobs and Factory Data

U.S. private employers hired the most workers in six months in June and factory activity picked up, providing fresh evidence the economy was gathering solid momentum after contracting at the start of the year.  The brightening growth outlook was also bolstered by other data on Wednesday showing auto sales remained strong in June and construction spending rose in May to its highest level in just over 6-1/2 years.

The recent raft of upbeat data supports views of a September interest rate hike from the Federal Reserve, although market-based forecasting tools suggest lift-off may not occur until late in the year or even in 2016.  “The economy has shifted back into solid growth mode. A strong June jobs number would make it clear the economy can absorb a rate hike and the Fed can move at any time it wants,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

The ADP National Employment Report showed 237,000 private-sector jobs were created in June, beating the median expectation among economists surveyed by Reuters for a gain of 218,000 jobs. Private payrolls increased 203,000 in May.  June’s gain marked the third straight month of improvement since the pace of hiring had slumped to a 14-month low back in March. Job increases last month were led by small businesses and the services sector.