U.S. private employers added far more jobs than expected in June, bouncing back from a surprise slump the month before, a report by a payrolls processor showed on Thursday.
Initial jobless claims slipped modestly in the week ended July 2 to 418,000, the Labor Department said.
KEY POINTS: * The private sector added 157,000 jobs last month, exceeding expectations for a gain of 68,000, according to a Reuters survey of economists.
OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN
The main market mover is the ADP number. It was more than double the expected forecast, and certainly, that's an encouraging number, given that we've had some pretty disappointing jobs numbers over the last few months. It raises the risks of an upside surprise to the payrolls figure tomorrow. We see that reflected in the dollar doing well against the majors. It's a little early to conclude we're coming out of a soft patch, but the jobs numbers do suggest we were seeing a temporary slowdown caused by high energy prices and temporary supply chain problems from Japan's earthquake.
DAVID RESLER, CHIEF ECONOMIST, NOMURA SECURITIES INTERNATIONAL, NEW YORK:
I think that the details don't show a lot that's surprising. The details show pretty much what we would've expected on the headline numbers.
The composition of growth, job gains, once again, is pretty heavily concentrated in small business; it confirms what we thought -- that last month we believed was an understatement of what was going on. Last month was an outlier.
We're still running a little bit below the six-month average. But it's generally a confirmation that the weakness we saw in the May data was more in the way of a bump in the road rather than falling off into some abyss.
It's consistent with what we heard from the Fed chairman. The soft patch will prove to be a temporary one, but that doesn't mean we'll be roaring ahead with growth.
These data are getting us back to the trend growth.
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:
Not even with the unanticipated influx of claims from unemployed persons in Minnesota -- who reported 2,500 filings stemming from their government shutdown -- did unadjusted claims rise as much as seasonals had expected (10k rise vs. 23k forecast). This seasonally adjusted decline of 14k did little to help the four-week moving average, which slipped down 3k to 424,750.
It would take a couple more weeks of declines to start impacting the average given the consistent readings in the mid-to-high 420s for most of June. Then we would start to see a smoothed reading in the low 400s, which has not been posted since March.
GAIL DUDACK, MANAGING DIRECTOR, DUDACK RESEARCH GROUP, DIVISION OF WELLINGTON SHIELDS, NEW YORK:
They look better than consensus so that should make the market fairly happy today.
I think there are two big things on the table this week. Today is the Oval Office budget meeting and tomorrow is employment. Both of them are clouds hanging over the market. I consider them really, in terms of the U.S. economy's long-term future, the biggest issues.
I think the ADP number puts a positive spin on that. Let's hope we don't get disappointed on Friday and any kind of credible budget resolution could take the market to new highs.
ADP is helping, but ADP hasn't been really within 10 percent of the real number ever, so it is not a particularly good predictor for the actual number. I don't think we should get our hopes up too much, but it certainly puts a good tone to it. To some extent, the consensus numbers for Friday have been coming down, which is good because it opens the door for positive surprise. But today's number is probably going to reverse that. I think there are lots of economists probably scrambling.
ANDREW COX, G10 FOREX STRATEGIST, CITIGROUP, NEW YORK:
Certainly this is a reflection of a drop in expectations given that we expected larger job gains in the last three ADP reports. What is good news for risk and the US economy is bad news for the yen. Europe is in its own orbit right now. This report certainly backs the risk-on trade. ADP had been a bad predictor of payrolls in the past, but the last few it became a better predictor, so revisions higher in payrolls can be expected.
PETER KENNY, MANAGING DIRECTOR AT KNIGHT EQUITY MARKETS IN JERSEY CITY, NEW JERSEY:
A lot better than expected and better in the right place: manufacturing. That is precisely the kind of number the market needs in order to bolster confidence that our soft is brief and behind us. It is an important number, it's definitely the type of green light the market is looking for to move higher.
It certainly will confirm the move higher that we've seen because we've run into some near-term resistance here as evidenced by yesterday's action and this could give us the fuel to move beyond resistance. That would be very constructive.
GUY LEBAS, CHIEF FIXED INCOME STRATEGIST, JANNEY MONTGOMERY SCOTT, PHILADELPHIA
The ADP results certainly put a bit of an optimistic spin on Friday's payroll survey.
MARKET REACTION: STOCKS: U.S. stock index futures added to gains BONDS: U.S. bond prices extended losses FOREX: The dollar extended gains against the yen