Private sector added 195,000 jobs in August, says ADP

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Private sector employers added 195,000 jobs in August, according to payroll giant ADP, with businesses of all sizes hiring more workers, despite some worrying signs of an economic downturn ahead.

Small businesses added 66,000 jobs in August, including 26,000 in companies with between one and 19 employees, and 40,000 in businesses with between 20 and 49 employees. Midsized businesses added 77,000 jobs. Large businesses added 52,000 jobs, including 5,000 at companies with between 500 and 999 employees, and 47,000 at organizations with 1,000 employees or more.

“In August we saw a rebound in private-sector employment,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, in a statement. “This is the first time in the last 12 months that we have seen balanced job growth across small, medium and large-sized companies.”

The service-providing sector accounted for 184,000 new jobs in August, including 35,000 in professional and business services such as accounting and tax prep services, along with 5,000 in financial activities like banking. The goods-producing sector added 11,000 jobs in August.

“The job gains were broad-based across industry,” said Mark Zandi, chief economist at Moody’s Analytics, which compiles the monthly national employment report with ADP. “There was particular strength in education and health care, and also in leisure and hospitality, but we also had some gains in manufacturing and most other sectors. Across company sizes, there were consistent job gains even amongst smaller companies. The last several months, up until August, we had been seeing some real weakness and outright declines in employment in the smallest companies with less than 20 employees. Job growth has turned positive in the month of August. It’s still soft by recent historical standards, but it’s turned positive. Midsize companies continue to be the most significant adders to payroll, as has been the case now for a couple of years.”

However, there are some possible headwinds facing employers if the trade war with China continues, Zandi warned during a conference call with reporters Wednesday. “If the trade war continues, and continues to weigh on business sentiment and confidence, and businesses start to pull back more broadly in their hiring — or if they start laying off workers, and that has not happened yet, which is good news, but something you should watch — if that were to happen and unemployment started to rise and job growth slowed any further and went down below 100K on a consistent basis, unemployment would start to rise. That would weaken consumer confidence, which to date has been strong, causing consumers to become more cautious spenders, and that would incent businesses to become even more cautious in their hiring and payrolls. You can see how we would go from an economy that’s just fine and expanding to a recessionary economy, and that’s why recession risks at this point are high, and you can connect the dots right back to the trade war.”

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Payroll ADP Small business Mark Zandi Moody's Analytics