The move to get displaced workers back to their jobs slowed sharply in July, with private payrolls increasing by just 167,000, ADP reported Wednesday.
That total was well below the 1 million expected from economists surveyed by Dow Jones and represented a tumble from the 4.314 million created in June, according to the report, which is prepared in conjunction with Moody’s Analytics.
One bright spot was that the June total was revised sharply higher from the approximately 2.4 million in the initial estimate. However, that month, combined with May’s 3.34 million increase, still leaves the jobs market well short of the 19.7 million positions lost in March and April as the U.S. economy went into shutdown mode to stem the coronavirus pandemic.
Despite the big miss, the report had little market effect as futures indicated a higher open on Wall Street. The ADP tally and the government’s official count can differ widely, and jobs numbers during the pandemic have been volatile and subject to substantial revisions.
“It is worth reiterating that the ADP has never been a great guide to the official payrolls figures and has actually been particularly poor in recent months, with the ADP’s initially published estimates for May and June (which have since been miraculously revised up to better match the official data) proving far too pessimistic,” Andrew Hunter, senior U.S. economist at Capital Economics, said in a note.
Businesses with between 50 and 499 employees reported an outright decline of 25,000. Big business brought back 129,000 jobs while firms with fewer than 50 workers added just 63,000.
All but 1,000 of the jobs came from the services sector, as professional and business services led with 58,000. Education and health services added 46,000 and trade, transportation and utilities contributed 41,000.
The battered hospitality sector, which took the brunt of the closings as bars and restaurants shuttered across the nation, saw an addition of 38,000. However, financial activities lost 18,000 and information services dropped by 3,000.
On the goods-producing side, manufacturing added 10,000, but construction lost 8,000 and mining and natural resources fell by 1,000.
“The labor market recovery slowed in the month of July,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “We have seen the slowdown impact businesses across all sizes and sectors.”
The news comes two days before the Labor Department releases its more closely watched nonfarm payrolls count. Dow Jones estimates are for growth of 1.48 million after last month’s record 4.8 million.
Some economists, however, have expressed skepticism about that forecast and have indicated a chance that the economy even may have lost jobs during July.
Rising coronavirus cases have caused states and regions to scale back their reopening strategies. Minneapolis Federal Reserve President Neel Kashkari suggested Sunday on CBS’ “Face the Nation” that the country ought to go into complete shutdown again to stop the virus spread. Kashkari will appear Wednesday at 3 p.m. on CNBC’s “Closing Bell.”