A Pop in US Payrolls

Private-sector employment rose 157,000 in June, according to Automatic Data Processing Inc.’s employment report released Thursday, in what could be a signal that the recent economic soft patch may not last long.

The headline number surprised Wall Street, coming in more than double the 70,000 increase expected by economists.With the report typically considered the first stab at counting job gains each month, markets will be watching the ADP data closely because last month’s report accurately predicted the sharp drop in nonfarm payroll subsequently reported by the government for May.

The ADP data indicate job growth in June will be better than the tepid performance in May. On Friday, the Labor Department will report on June’s nonfarm payrolls, which also include the public sector. Economists polled by MarketWatch are looking for a gain of 115,000 and for the nation’s unemployment rate to remain steady at 9.1%.

This would be a pickup from the slow growth of 54,000 in nonfarm jobs added during May. Job gains were a revised 36,000 in May, compared with the initial estimate of just 38,000, the ADP data also showed.

Still, the current labor market remains decidedly weak, and it will take much more than one strong month to move it into healthy territory and make a meaningful dent in the unemployment rate.

Over the past two years, there have been periods where it looked like some healing would take place only to see subsequent months prove disappointing.

Other indicators have shown continued tough times in the labor market. On Wednesday, for example, outplacement consultancy firm Challenger Gray & Christmas Inc. reported that planned layoffs were 41,432 in June, up 5.3% from the prior year. This is first increase since February.

In other news, retailers took advantage of pent-up demand, and consumers of stores’ willingness to promote, in June, driving increases in same-store sales that far exceeded analysts’ and in many cases stores’ expectations.

For example, Limited Brands Inc. reported a 12% increase in comparable-store sales last month, led by a 17 % gain at Victoria’s Secret. Analysts had predicted a 3.8% increase, with the innerwear unit ahead 3.5%.

Gap Inc. posted an overall comp increase of 1%, versus expectations of a 2.3% decline. Gap North America was down 1% for the month, but the firm’s other three divisions registered increases, with Old Navy up 2%, Banana Republic up 3% and international up 3%.

Macy’s Inc., up against expectations of a 5.1% increase, reeled in a 6.7% advance instead, while Dillard’s Inc., up 6%, nearly doubled the 3.3% Wall Street had expected.