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Aug 5, 2015

Private sector hiring slowed in July, adding 185,000 new jobs to the U.S. economy, a number well below the predictions of economists whose collective forecast was that 215,000 jobs were added.

Every industry sector tracked by HR services provider ADP and its partner, Moody’s Analytics, showed a decline from June, according to the ADP National Employment Report. Businesses with fewer than 50 workers, which have been growing jobs faster than all other businesses for months, added 59,000 in June. That’s the smallest number for those businesses since December 2013.

“Job growth is strong, but it has moderated since the beginning of the year,” said Mark Zandi, Moody’s chief economist. “Layoffs in the energy industry and weaker job gains in manufacturing are behind the slowdown. Nonetheless, even at this slower pace of growth, the labor market is fast approaching full employment.”

The Labor Department’s employment report, due out Friday, is expected to show both private employers and government added 225,000 workers to U.S. payrolls. That would be just above the average of 208,000 new jobs for the first 6 months of this year. A year ago the first 6 months averaged 252,000 new jobs monthly.

Barring a dramatic surprise in Friday’s report, the Federal Reserve is poised to raise interest rates next month for the first in almost 10 years. Besides job creation, the Fed’s Board is also watching other labor market indicators such as the unemployment rate (expected to remain at 5.3%), wage growth and the labor force participation rate.

In another report Wednesday, the Institute for Supply Management said its service sector index of new orders stood at 63.8% in July, its highest since August 2005. The ISM’s overall non-manufacturing index registered 60.3%, a 4.3 point increase over June.  A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding.

Service sector employment also reached a ten year high, coming in at 59.6%, a jump of 6.9 percentage points over June.

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