Disappointing ADP Jobs Report Shows Economy Not In Full Swing
Payroll giant ADP released their August National Employment report for August, which shows private sector employment increased by 374,000 jobs in August.
The report, produced by the ADP Research Institute and Moody’s Analytics, is derived from ADP’s actual payroll data and measures the change in total nonfarm private employment each month on a seasonally adjusted basis.
Medium and large-sized businesses experienced the most significant growth, adding 149,000 and 138,000 jobs respectively. Small businesses accounted for 86,000 new jobs. By sector, 329,000 of the overall jobs added were in service-providing roles. Of these positions, 200,000 were in the leisure and hospitality sector, continuing the trend where the sector accounts for the majority of new jobs added over the past few months.
The concentration in leisure and hospitality jobs continues as the economy continues to recover from the pandemic and shuttered businesses slowly reopen. Americans increasing their travel has also contributed to the uptick in available positions in the hospitality industry.
Although jobs continue to swell in the leisure sector, chief economist for Moody’s Mark Zandi states, “the Delta variant of COVID-19 appears to have dented the job market recovery. Job growth remains strong, but well off the pace of recent months. Job growth remains inextricably tied to the path of the pandemic.”
Job recovery has occurred in sectors where natural demand necessitates more positions, but the labor market overall is being capped by ongoing pandemic concerns.
ADP echoed these sentiments adding, “our data, which represents all workers on a company’s payroll, has highlighted a downshift in the labor market recovery. We have seen a decline in new hires, following significant job growth from the first half of the year…despite the slowdown, job gains are approaching 4 million this year yet still 7 million jobs short to pre-COVID-19 levels,” highlighting that high jobs report numbers camouflage a struggling economy.
Zandi added that although the service industry has created many new opportunities, the Delta variant keeps these new positions uncertain overall.
Treasury yields fell flat on Wednesday morning amidst the news, as the ADP report U.S. companies created much fewer jobs than expected. Dow Jones had estimated an additional 600,000 to be added, well above the ADP data showing 374,000. The yield on the 10-year Treasury note remained near 1.3% with the yield on the 30-year Treasury bond also little-changed at 1.924%.
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