By Natalie DeCoste
Private companies in the U.S. added hundreds of thousands of jobs in July but unfortunately not as many as expected, raising eyebrows about the state of the job market.
On August 4, payroll processing firm ADP reported that employers added 330,000 positions for July, a sharp decline from the 680,000 added in June. The figure is a far cry from the 653,000 jobs economists anticipated.
“The labor market recovery continues to exhibit uneven progress, but progress nonetheless. July payroll data reports a marked slowdown from the second quarter pace in jobs growth,” said Nela Richardson, chief economist, ADP.
The July numbers were the smallest gain since February. The impact of the small gains could be seen in the market, with Dow futures down nearly 120 points and most government bond yields pulling back.
These figures also indicate that job growth continues to lag expectations amid growing reports and evidence of labor shortages coupled with a resurgence COVID-19 pandemic due to the Delta variant gaining traction. These numbers may also serve to lower expectations for the Labor Department’s employment report for June, set to be released this upcoming Friday.
“For the fifth straight month, the leisure and hospitality sector is the fastest growing industry, though gains have softened. The slowdown in the recovery has also impacted companies of all sizes. Bottlenecks in hiring continue to hold back stronger gains, particularly in light of new COVID-19 concerns tied to viral variants. These barriers should ebb in coming months, with stronger monthly gains ahead as a result,” reported Richardson.
The data showed that small businesses added 91,000 jobs, medium-sized businesses added 132,000 jobs and large companies added 106,000 jobs. The leisure and hospitality industry, which took a beating during the pandemic, grew the most out of any sectors looked at by ADP, coming in at 139,000 jobs added. Meanwhile, the information sector lost 1,000 jobs in July, the only sector to be in the negatives.
Goods-producing industries, which include agriculture, forestry, fishing, hunting, mining, construction, and manufacturing, added 12,000 jobs. Of those 12,000, most were in the manufacturing industry, which added 8,000 jobs. Natural resources and mining gained 3,000, and construction added just 1,000 new positions.
The ADP numbers can differ significantly from those reported by the Labor Department, as the ADP averages about 30,000 fewer jobs a month than the official government tally. The Labor Department, unlike ADP, includes government jobs in its total and is expected to show a total gain of 845,000 after June’s 850,000 increase.
Another crucial number to examine is the number of job openings currently available. According to the Department of Labor, the number of job openings has surged to all-time highs in recent months, with an estimated 9.2 million job openings nationwide.