ADP Finds Private Sector Added 177,000 Jobs in August

Private sector employers added a healthy 177,000 jobs this month, according to the monthly national employment report from payroll giant ADP.

ADP reported that small businesses added 63,000 jobs in August, down from 68,000 in July. The total included 24,000 at small businesses with between one and 19 employees and approximately 38,000 at businesses with between 20 and 49 employees.

Midsize businesses with between 50 and 499 employees gained 44,000 jobs in August, down from 71,000 in July. Large businesses added 70,000 jobs in August, up from 56,000 in July, including 25,000 at companies with between 500 and 999 employees, and around 46,000 at larger businesses with 1,000 employees or more.

Service-providing companies added 183,000 jobs in August, down from 199,000 in July. Professional and business services, which include accounting and tax preparation along with other types of services, contributed 53,000 jobs in August, down from 70,000 in July. The combined trade, transportation and utilities sector gained 26,000 jobs in August, down from 31,000 jobs in July. The financial activities sector added 15,000 jobs in August, up from 13,000 jobs in July. Franchise businesses added 19,200 jobs in August.

Goods-producing employment declined by 6,000 jobs in August, following losses of 5,000 in July. The construction industry lost 2,000 jobs in August, following a loss of 5,000 jobs in July. Manufacturing jobs were essentially flat in August, after gaining 5,000 in July.

However, the report was essentially a positive one for most sectors of the economy.

“The labor market is sturdy and strong,” said Mark Zandi, chief economist at Moody’s Analytics, which compiles the monthly national employment report with ADP. “The rate of job creation is very good. Just for context, we need to create approximately 85,000 jobs per month just to absorb the growth in the working age population, so the current rate of job growth is more than double what’s necessary to absorb that growth, which means that unemployment and underemployment continue to decline. The economy is not quite at full employment, but we’re pretty close.”

Zandi noted that job growth has been fairly broad-based this month, with the exceptions of the energy sector and the construction industry, along with some softness in the manufacturing industry. However, he predicts the job losses in the energy sector should wind down by the end of the year as oil prices continue to stabilize. Weakness in the construction sector could be seasonal or weather related, although there are encouraging signs in the strong market for single-family housing. The service side of the economy has generally been very strong in terms of job growth. ADP also saw strong growth at large companies this past month, despite challenges abroad.

The labor market is also showing some other positive indications from other sources, Zandi noted, including a record number of open positions and a record low number of layoffs. Another positive sign is the acceleration in the growth of the number of new establishments of small businesses.

“The recession knocked the wind out of the small business sector and they showed outright declines in the number of establishments out there, but the most recent data from the unemployment insurance records is we’re seeing pretty solid growth,” said Zandi. “The number of new establishments is the strongest it’s been since the housing bubble back in 2006.” Growth has occurred in a most sectors, particularly in the software and technology industry.

He predicts that when the U.S. Bureau of Labor Statistics reports its monthly job numbers for both the private and public sectors on Friday, it will show a gain of approximately 185,000 to 190,000 jobs this month, but due to technical issues involving when many employers report their payrolls during the summer months, that figure will probably be revised upward in later reports.

For reprint and licensing requests for this article, click here.
Payroll
MORE FROM ACCOUNTING TODAY