A Panda Express restaurant displays a “Now Hiring” sign in Tampa, Florida, June 1, 2021.
Octavio Jones | Reuters
U.S. companies created far fewer jobs than expected in August as the Covid resurgence coincided with cutbacks in hiring, according to a report Wednesday from payroll services firm ADP.
Private payrolls rose just 374,000 for the month, well below the Dow Jones estimate of 600,000 though above July’s 326,000, which was revised downward slightly from initial 330,000 reading.
Most of the new jobs came from leisure and hospitality, which added 201,000 positions in a somewhat hopeful sign that an industry beset by a labor shortage continues to recover.
Education and health services combined to add 59,000 for the month as hospitals in some parts of the country are swamped with virus cases and schools begin to reopen.
“The Delta variant of COVID-19 appears to have dented the job market recovery,” said Mark Zandi, chief economist at Moody’s Analytics, which works with ADP on the report. “Job growth remains strong, but well off the pace of recent months. Job growth remains inextricably tied to the path of the pandemic.”
The apparent letdown comes at a pivotal time.
Following a robust recovery from the shortest but steepest recession in U.S. history, economic data of late has been disappointing, possibly reflecting pullbacks from this summer’s surge of the Covid Delta variant. The U.S. has been averaging about 150,000 new cases a day following a burst in July and August.
Markets are awaiting Friday’s nonfarm payrolls report, which is expected to show 720,000 new jobs added and an unemployment rate falling to 5.2%, according to Dow Jones estimates.
Wall Street largely shrugged off the report, with stock market futures still pointing to a higher open.
The ADP numbers could be pointing to a softer Labor Department report, though the firm’s count has been an unreliable indicator in 2021.
ADP’s tally indicated an average 495,000 growth per month through July; the Labor report showed an average increase of 617,000 during that period. The two reports also diverged sharply in July, with the official count at 943,000 compared to ADP’s 326,000.
According to ADP, the weakest job growth for August came in small businesses, which added just 86,000 positions. Companies with between 50 and 499 employees led with 149,000, while big business contributed 138,000.
Elsewhere at the sector level, services accounted for 329,000 of the total, with professional and business services growing by 19,000 and trade, transportation and utilities adding 18,000.
Of the 45,000 goods-producing jobs, 30,000 came from construction, 9,000 from natural resources and mining and 6,000 from manufacturing.
Federal Reserve officials are watching the jobs numbers carefully.
Recent statements out of the central bank indicate that it likely will slow down the pace of bonds it buys each month so long as job growth continues apace. Officials have been largely optimistic about the employment picture, though they note that there still about 6 million fewer workers holding jobs now than before the pandemic.
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