ADP Reports Disappointing Private Sector Job Growth In July

Private sector employment rose by 167,000 in July, but the numbers are a far cry from June, when private-sector employment increased by nearly 2.4 million jobs, according to the ADP National Employment Report released on Wednesday (Aug 5).

The total was well below Wall Street predictions that the number of new jobs in the private sector would reach one million. ADP found that while June’s payroll was revised upward to 4.3 million, the nation’s jobs market has a long way to go before it recovers from the damage inflicted by COVID-19 in March and April.

While the revised number for June was good news for the economy after May’s increase of 3.3 million jobs was added, the nation’s job market is short of the nearly 20 million jobs lost earlier this year as shutdowns began to prevent the spread of the coronavirus.

“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.”

At 129,000, the biggest job gains were seen at large businesses, defined as having 500 to more than 1,000 workers. Small businesses with between one and 49 workers saw job growth of 63,000. But medium-sized businesses with between 50 and 499 workers saw 25,000 jobs disappear in July.  

Among the sectors that were hurting last month included financial activities, which shrunk by 18,000; construction, which was down 8,000 jobs; information services, which fell by 3,000; and mining, which was off by 1,000.

Mark Hamrick, Bankrate.com’s senior economic analyst, said the country is waging two fights: one against the coronavirus and the other to bring back jobs. “Ultimately, as we’ve failed to win the battle against the virus, the economic rebound has become more precarious after the historic second-quarter GDP contraction,” he said in a statement. Adding an added thread of unwelcome uncertainty, elected officials in Washington have failed to agree on a fresh round of economic relief legislation.”

The outlook was a lot better at the close of June, when ADP reported that private-sector employment increased by nearly 2.4 million jobs from May to June, according to the ADP’s June report.

In collaboration with Moody’s Analytics, ADP tracks actual payroll data and measures the change in total nonfarm private employment each month on a seasonally adjusted basis.

The report comes two days before the U.S. Department of Labor is scheduled to release the closely watched nonfarm payrolls count. On Thursday (Aug. 6), the DOL is set to release the number of jobless claims filed last week.