Private sector employers added 374,000 jobs last month, payroll giant ADP
Small businesses added 86,000 jobs in August, including 25,000 in businesses with between one and 19 employees, and 61,000 in businesses with between 20 and 49 employees. Medium businesses with between 50 and 499 employees gained 149,000 jobs in August. Large businesses added 138,000 jobs, including 41,000 in companies with between 500 and 999 employees and 96,000 in corporations with 1,000 employees or more.
The goods-producing sector added 45,000 jobs in August, including 30,000 in the construction industry, 9,000 in natural resources and mining, and 6,000 in manufacturing. The service-providing sector gained 329,000 jobs in August, including 19,000 in professional and business services such as accounting, auditing and tax preparation, and 13,000 in financial activities such as banking. Franchises added 52,300 jobs in August.
However, the news wasn’t all good. ADP’s data pointed to a slowing recovery in the labor market, with a decline in new hires, after significant job growth in the first half of 2021.
“Our latest report suggests that the labor market recovery has downshifted,” said ADP chief economist Nela Richardson during a conference call Wednesday with reporters.
She noted that ADP’s model regularly adjusts the data in its National Employment Report for seasonal declines and subsequent revisions by the U.S. Bureau of Labor Statistics of the initial release of the August job numbers, which are due out Friday.
“Even with this technical adjustment in mind, final estimated job gains for August will likely fall short of the rapid average monthly pace of hiring that we’ve seen since January of this year,” Richardson added. “Despite the slowdown, job gains are approaching 4 million in 2021, though private sector payrolls are still about 20 million jobs short of pre-COVID-19 levels. The variability of job gains has narrowed of late with small, midsized and large firms growing mostly in lockstep.”
The Delta variant has been a significant factor depressing hiring. “Service providers continue to do most of the heavy lifting, adding the lion’s share of positions in August, though this sector in general, and leisure and hospitality specifically, is posed to see the most gains in 2021,” said Richardson. “The U.S. economy is facing increasing headwinds as the pandemic wears on and the Delta variant creates uncertainty. Businesses are looking to staff up quickly but are also having trouble filling openings as quickly as they’d like. Many labor supply issues will resolve themselves in the coming months, but downside risks remain until the Delta variant is better controlled.”
She is also seeing waning consumer confidence about the economy since earlier this year affecting restaurant reservations and air travel. On the positive side, there is strong labor market demand. “The most recent data shows job openings remain at record highs as businesses look to staff up to meet still surging demand,” said Richardson. “Moreover jobless claims continue to improve and are sitting near the lowest level since the pandemic began.”
