NEW YORK Private employers hired more workers than expected in June, a report released on Wednesday showed, supporting the view of overall moderate job gain but one that might allow the Federal Reserve to reduce stimulus later this year.
The ADP National Employment Report said U.S. companies added 188,000 jobs in June, exceeding median forecast of 160,000 among economists polled by Reuters. It was higher than a slightly downgraded 134,000 increase in May.
The ADP figures came in advance of the government's release of payrolls data on Friday at 8:30 a.m. (1230 GMT). Economists expect a non-farm payroll gain of 165,000, a tad lower than May's 175,000 increase.
Private-sector hiring improved last month as consumer spending remained resilient and the housing recovery stayed on track, said Moody's Analytics' chief economist Mark Zandi.
The latest figures were "encouraging. The (jobs) market is holding firm," Zandi said during a conference call with reporters after the release of the June report.
Payrolls processor ADP jointly developed its jobs report with Moody's Analytics.
The current monthly pace of U.S. job gains will likely lower the unemployment rate by 1/2 point a year, Zandi said.
The U.S. jobless rate, which was 7.6 percent in May, should fall to 7.0 percent a year from now and to 6.5 percent in the summer of 2015, according to Zandi.
The steady pace of hiring is consistent with the scenario that allows the Fed to pare its $85 billion monthly purchases of bonds later this year, Zandi said. The central bank's bond buying has been aimed partly at lowering unemployment.
"That's the script they laid out," Zandi said. "It argues for the case for tapering later this year."
Last month, Fed Chairman Ben Bernanke laid out the roadmap for the central bank to possibly reduce its purchases of Treasuries and mortgage-backed securities if the economy shows further improvement and a steady pace of jobs growth continues.
A broad spectrum of industries added workers last month, according to ADP.
Utilities and trade and transportation companies expanded their payrolls the most in June with a combined 43,000 jobs, the strongest rise since the start of the year.
Construction payrolls grew by 21,000 in June, while goods-producing employment rose by 27,000 jobs for its biggest monthly increase in four months.
Manufacturers added 1,000 jobs following two months of losses, despite signs of weakening exports.
Small businesses led the month's hiring with 84,000 jobs, followed by 55,000 among medium-size businesses and 49,000 among large businesses, ADP said.
(Reporting by Richard Leong; Editing by Chizu Nomiyama)