ADP: Market Strong Despite Sluggish Jobs Growth

Payroll service provider ADP released its monthly hiring statistics for U.S. companies late last week, finding a drop in hiring growth for businesses of all sizes.

Reports in CNBC said private firms in the country added 163,000 jobs last month — a drop from 217,000 in July. Reports noted that the figures also missed Wall Street expectations, which had predicted 190,000 jobs added for August.

This year, companies averaged 206,000 added jobs each month, ADP noted, also highlighting August’s sluggish performance. Still, ADP Research Institute’s vice president and co-head, Ahu Yildirmaz, said that the data does not signal any loss of strength in the business community.

“Although we saw a small slowdown in job growth, the market remains incredibly dynamic,” Yildirmaz said.

In an interview with CNBC, Moody’s Analytics’ chief economist, Mark Zandi, said ongoing trade disputes are impacting the U.S. labor market, particularly for large corporates. “They’re starting to become more cautious in their hiring,” Zandi said.

Small businesses with fewer than 50 employees added only 19,000 jobs last month, ADP figures showed. Medium-sized businesses, with between 50 and 499 employees, added 111,000 — the most out of any other employee size group.

Businesses with more than 500 workers added a mere 31,000 jobs.

“The job market is hot,” Zandi continued. “Employers are aggressively competing to hold onto their existing workers and to find new ones. Small businesses are struggling the most in this competition, as they increasingly can’t fill open positions.”

Examining the jobs growth statistics by sector, ADP found that service providers led the way in job additions, providing 139,000 new jobs in August. Business services, education, health services, and leisure and hospitality followed.

On the lower-end, only 5,000 construction jobs were added last month, while 19,000 manufacturing jobs were added.

ADP’s report was released the same week separate research on small business hiring found additional evidence of a slowdown, with the Paychex and IHS Small Business Employment Watch Index declining for August. Conversely, CBIZ’s Small Business Employment Index actually found a slight increase in hiring activity for small businesses.