Jobs Growth Stronger Than Expected, Unemployment Holds Steady

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The U.S. economy adds 195,000 jobs in June, more than economists had expected, and job growth has been revised upward for the past two months, signaling greener pastures ahead for the labor market.

The change in total nonfarm payroll employment for April has been revised to 199,000 jobs gained, up from a previously reported 149,000. For May, 195,000 jobs have been added, up from the 175,000 jobs previously reported.

Unemployment, meanwhile, stands at 7.6 percent in June, unchanged from the previous month. While this figure might not have market watchers jumping up for joy, "it is a positive sign that more people flowed into the labor force and shows the labor market is on the right track," says Kurt Rankin, an economist at PNC Financial Services Group. "We're not seeing a summer swoon as we have in the past few years."

It also means the Federal Reserve is likely to forge ahead with its plans to cut back on its bond-buying activity later this year and to ultimately end the bond-buying program by mid 2014. All eyes are on this month's job report, since a worse-than-expected hiring picture might have diverted the Fed from its stated course of action.

"I think the Fed will stay exactly on track with its plan," Rankin says.

Total nonfarm payroll employment in June is in line with the average monthly gain of 182,000 jobs over the prior 12 months. In June, job growth is seen in leisure and hospitality, professional and business services, retail trade, health care and financial services.

Related: The 10 Fastest-Growing Industries for Small Business

While the monthly jobs report does not break out companies by size, a separate report on Wednesday from payroll processer ADP shows that small businesses added 84,000 jobs in June, on a seasonally adjusted basis. In May, small businesses added 63,000 jobs, revised upward from the previously reported 58,000, and in April, small businesses added 57,000 jobs.

The June jobs growth accounts for 45 percent of employment gains across all payroll size groups, according to ADP. Among small businesses, 64 percent of the employment growth comes from companies with between one and 19 employees, ADP says.

Another report, SurePayroll's Small Business Scorecard, released Monday, paints a slightly worse hiring picture for ultra-small firms. Month-over-month hiring was down 0.1 percent in June, and the average paycheck was down 0.1 percent. SurePayroll compiles data from more than 40,000 small businesses, including trends affecting businesses with an average of eight employees. 

Despite the drop in employment among micro-firms, optimism remains high for better times ahead. More than half of small businesses polled by SurePayroll say they expect to surpass expectations in the third quarter of this year. More than half also plan to make new investments in the third quarter, most likely in marketing, technology and new staff.

Related: Small Business Optimism Grows Despite Stagnant Hiring, Paycheck Size

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