NEW YORK/WASHINGTON (TIP): US private employers added 176,000 jobs in August and new claims for jobless benefits fell last week, which could bolster expectations the US Federal Reserve will begin winding down a bondbuying stimulus program this month. Payrolls processor Automatic Data Processing (ADP) said on September 5 private sector employment expanded less than in July, but analysts said the data still backed the consensus view that a more comprehensive employment report, due on September 6, will show improvement. “(It’s) enough to reinforce expectations that the Fed will begin to taper its asset purchases,” said Paul Ashworth, an economist at Capital Economics in Toronto. US treasury debt prices fell to session lows after the data, with the yield on the two-year note rising above 0.5% for the first time since June 2011 on bets the Fed would start to reduce bond purchases soon.
Stock futures were little changed while the dollar gained against the euro. Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 180,000 jobs. July’s private payrolls gains were revised to 198,000 from the previously reported 200,000. The report is jointly developed with Moody’s Analytics. The ADP data comes one day before the US government’s report on August non-farm payrolls, which investors will scour in hopes of divining the future direction of the Fed’s massive asset-buying program. The Fed is now weighing when to pull back on its purchases of $85 billion per month in treasuries and mortgage-backed securities. Views that the Fed could slow its buying pace as soon as its September 17-18 meeting sent treasuries yields to twoyear highs recently. But policymakers say their decisions will depend on data showing the health of the world’s biggest economy. Policymakers want to see the unemployment rate closer to 6.5% from its current 7.4%.