U.S. private payrolls miss expectations in June - ADP

WASHINGTON, July 1 (Reuters) - U.S. private payrolls increased less than expected in June and gains are likely to curbed by a surge in COVID-19 infections, which is threatening the nascent recovery from the recession.

The ADP National Employment Report on Wednesday showed private payrolls increased by 2.369 million jobs last month. Data for May was revised up to show payrolls surging 3.065 million, in line with a surprise rebound in job growth reported by the government, instead of dropping 2.76 million as previously estimated.

Economists polled by Reuters had forecast private payrolls increasing by 3.0 million in June.

The economy slipped into recession in February. The reopening of many businesses after being shuttered in mid-March to slow the spread of the respiratory illness has lifted consumer spending and manufacturing after record declines.

Consumer confidence has perked up and the housing market is improving. But the resumption of operations has been accompanied by a surge in coronavirus cases across large parts of the country, including the densely populated California, Florida and Texas. This has prompted authorities to scale back or pause reopenings, which could unleash a new wave of layoffs.

The ADP report, jointly developed with Moody's Analytics, was published ahead of the government's more comprehensive employment report for June scheduled for release on Thursday. U.S. financial markets and the government will be closed on Friday in observance of Saturday's Independence Day holiday.

The ADP report has a poor track record forecasting the private payrolls component of the government's employment report because of methodology differences. It failed to predict the rebound in job growth in May. The government nonfarm payrolls count is compiled from a survey of businesses while the ADP figures are derived from ADP payroll data and other inputs.

According to a Reuters survey of economists, the employment report will likely show private employers hired 2.9 million workers in June. That would lead to nonfarm payrolls increasing by 3 million on top of the 2.5 million created in May.

Still, payrolls would be nearly 17 million below their pre-pandemic level. The jobless rate is forecast dipping to 12.3% from 13.3% in May. (Reporting by Lucia Mutikani Editing by Chizu Nomiyama)