Private sector adds 188,000 jobs in June

He called the jobs number "encouraging" especially considering that forecasts predicted a sharp slow down in the labor market through the summer because of the Jan. 1 tax increases and the $80 billion in across-the-board spending cuts. 

Another positive for the job market and the economy is that the gains were broad-based across all sizes and types of businesses, Zandi said. 

Businesses with 49 or fewer employees added 84,000 jobs in June, medium-sized companies added 55,000, while employment at large companies — those with 500 or more employees — increased by 49,000.

Construction payrolls were another bright spot in the report, adding 21,000 in June, the biggest gain since January.

The service-providing sector added 161,000 jobs in June, its largest increase since February and greater than the sector’s average gain of 146,000 through the first five months of the year.

Even manufacturing added 1,000 jobs after two months of declines. A separate manufacturing report on Monday showed that the sector returned to growth mode after a slowdown in May but that hiring contracted to its lowest level since September 2009. 

The ADP report comes two days ahead of the government's monthly figures for public and private job creation, which Zandi expects will come in around 175,000. 

Facing fiscal headwinds, job creation had been forecast to throttle back to about 125,000 a month but, so far, is maintaining a steady pace of growth. 

The reasons, Zandi surmises, are threefold — healthy stock market gains, the recovering housing market, which is creating jobs, and a drop in gas prices through the spring, which have provided a much-needed confidence boost.

Still, he warned, the "script is still being written" and judging from sluggish economic growth, the economy still faces some hurdles before picking up pace. 

Zandi had predicted that the healthcare law would weigh on hiring but the Obama administration's decision on Tuesday to delay implementation for a year could ease those concerns for now. 

Gross domestic product came in at 1.8 percent in the first quarter and is running at right about that for the April-June portion, about 1.6 to 1.7 percent, Zandi estimates. 

But those figures aren't stopping companies either stop hiring or layoff workers. 

The economy has kept up a steady pace, on average, of about 175,000 a month over the past year, suggesting that the jobless rate will be about 7 percent a year from now. 

Those estimates fall in line with the Federal Reserve's plans to scale back and eventually end its monthly stimulus purchases. 

In a separate report on Wednesday, the number of those filing for unemployment benefits fell 5,000 to a seasonally adjusted 343,000 last week.

The four-week average, which better predicts the direction of the job market dropped by 450 to 345,500, the Labor Department said.

This post was updated at 9:20 a.m.