Hiring outlook improves after jobless aid applications fall, private survey shows job gains

But despite all the gloom, American factories and service firms kept hiring in June. Economists say that suggests many companies are less worried that the spring slump will endure.

“It is beginning to look like the labor market is not nearly as weak as feared,” Joel Naroff, chief economist at Naroff Economic Advisors, said in a note to clients.

Wall Street was mixed in light of the latest economic reports. Stocks fell early but recovered much of their losses by midday. Bad news from Europe was offset by higher expectations for June job growth, which the government will report on Friday.

The economy added an average of just 73,000 jobs a month in April and May. That’s much lower than the 226,000 a month that were added in the first three months of the year. And it’s far too low to reduce the unemployment rate, which rose to 8.2 percent in May.

Before Thursday, most economists didn’t expect much change from that pace. They forecast that employers added 90,000 jobs last month, while the unemployment rate didn’t change, according to a survey by Factset.

But several sounded slightly more optimistic after seeing a slate of better data.

Weekly unemployment benefit applications dropped by 14,000 to a seasonally adjusted 374,000, the Labor Department said Thursday. That’s the fewest since the week of May 19.

Payroll provider ADP said businesses added 176,000 jobs last month. That’s better than the revised total of 136,000 jobs it reported for May and, if sustained, would be enough to lower the unemployment rate.

Goldman Sachs responded to the better data by raising its forecast to a gain of 125,000 jobs last month, up from its initial prediction of 75,000.

Brian Bethune, chief economist for Alpha Economic Foresights LLC, said he expects job growth of 120,000 to 140,000. But he warned that even those figures were too weak to bring down unemployment.

Economists typically say it takes at least 125,000 new jobs each month to absorb population growth.

“Looking forward, slow growth is expected,” said Erik Johnson, US economist, IHS Global Insight. “But the U.S. economy should avoid recession.”

A report on U.S. service companies, which employ 90 percent of workers in the economy, illustrated that point.

The Institute for Supply Management said its index of non-manufacturing sector growth fell last month to 52.1. That’s down from 53.7 in May and the lowest reading since January 2010.

Still, any reading above 50 signals growth. The sector has been growing since December 2009.

The report covers a range of businesses, from retail stores and restaurants to health care companies and financial services firms. Even though growth slowed in June, those firms increased hiring. An index that measures employment rose in June to 52.3 from 50.8 in May.