WASHINGTON (AFP) - The US economy created more private jobs than expected in July but hiring has not been rapid enough to ease a severe jobless rate, payrolls firm ADP said Wednesday.
Some 42,000 private-sector jobs were created following a revised June number of 19,000, ADP said ahead of a key government report Friday that is expected to show unemployment already at 9.5 percent ticking up.
Most economists had expected 25,000 private jobs to be established in July, the sixth consecutive monthly increase in hirings.
But ADP warned that the private job increases so far this year had averaged a modest 37,000, with no evidence of acceleration as economic growth from a brutal recession threatens to stall.
The government will release the July employment report on Friday with most economists expecting non-farm payrolls to fall by 87,000 in July and the unemployment rate to edge up to 9.6 percent.
The ADP survey tracks only private-sector jobs, while the Labor Departments nonfarm payroll data, include government workers.
The private sector is forecast to have created about 82,500 jobs in July but government employment is believed to have fallen 169,500 as more temporary jobs disappeared the reason why economists expect the Friday report to be weak.
Temporary hiring for a government population census had peaked in May and for this reason, Fridays figure... might be weaker than todays estimate for nonfarm private employment in the ADP report, the payrolls firm said.
The ADP report gave a mixed picture of the jobs situation but the numbers were hardly encouraging.
It estimated private employment in the service-providing sector rose by 63,000 in July while that in the goods-producing sector declined 21,000.
Hiring in the manufacturing sector also decreased 6,000, the first slide in six months, the report said. Large businesses, defined as those with 500 or more workers, saw employment remain flat while hirings among medium-size businesses, defined as those with between 50 and 499 workers, increased by 21,000.
Small-size businesses, defined as those with fewer than 50 workers, increased by 21,000.
Employment in the financial services sector, which has declined for more than three years, dropped 1,000, the smallest decline since June 2007.