Private sector added 2,369,000 jobs in June amid coronavirus, says ADP

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Private sector employers added 2,369,000 jobs in June, according to payroll giant ADP, in a promising sign of business recovery despite the COVID-19 pandemic. ADP also revised upward its May total from a loss of 2,760,000 jobs to a gain of 3,065,000 jobs.

Small businesses added 937,000 jobs in June, including 574,000 in businesses with between one and 19 employees, and 363,000 in businesses with between 20 and 49 employees. Medium-size businesses with between 50 and 4999 employees gained 559,000 employees. Large businesses gained 873,000 employees, including 101,000 in companies with between 500 and 999 employees, and 772,000 in organizations with 1,000 employees or more.

The service-providing sector accounted for 1,912,000 of the jobs added in June, including 151,000 in professional and business services such as tax preparation and accounting, and 65,000 in financial activities such as banking, although the information services industry lost 50,000 jobs. The goods-producing sector accounted for 457,000 jobs, including 394,000 in construction and 88,000 in manufacturing, although the natural resources and mining industry lost 26,000 jobs. Franchises added 4,500 jobs in June.

"Small business hiring picked up in the month of June," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, in a statement Wednesday. "As the economy slowly continues to recover, we are seeing a significant rebound in industries that once experienced the greatest job losses. In fact, 70 percent of the jobs added this month were in the leisure and hospitality, trade and construction industries."

Mark Zandi, chief economist at Moody’s Analytics, which helps compile the ADP National Employment Report, noted that the mining and information services industries still shed jobs during the month, but the situation is still improving, in part thanks to the Small Business Administration’s Paycheck Protection Program.

“Businesses of all sizes rehired strongly, although the job gains were disproportionately large for smaller businesses with fewer than 500 employees,” Zandi said during a conference call with reporters Wednesday. “That may reflect some benefit from the Paycheck Protection Program, which it looks like lawmakers are going to extend for another few weeks until the beginning of August. That looks like that may have had some benefit.”

He predicted that the U.S. Bureau of Labor Statistics jobs report, which is due out on Thursday and includes both private and public sector employment, should reflect an increase in employment of close to 3 million jobs created during the month. “Employment in state and local governments likely received a temporary bounce,” Zandi explained. “But this is mostly just a technical measurement and seasonal adjustment issue as state and local governments continue to shed jobs. They obviously have very significant financial problems.”

Zandi expects the BLS’s official unemployment rate will decline to 11.5%, but because of a technical problem that the BLS revealed last month in how it classifies employees, the actual rate is probably closer to 14.5%.

He noted that the job gains in May and June follow massive losses in March and April, and still leave employment about 16.5 million jobs below their February peak. “We obviously got into a big hole here because of the pandemic and we’re still just trying to claw our way out,” said Zandi.

As many states across the country see COVID-19 infections surging and start to slow down their business-reopening plans, that could depress employment gains this summer. “About a quarter of the workforce is still either unemployed or has lost hours or had their pay cut, and that’s a darker feature of the pandemic’s impact on the job market in that the businesses appear to be cutting back on nominal wages of their employees,” said Zandi.

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Payroll ADP Coronavirus Moody's Analytics Mark Zandi Small business