Disaster: ADP Says July Private Payrolls Climbed Just 167,000, Far Lower Than Expected
Businesses in the United States expanded their payrolls by just 167,000 in July, according to a report from payroll processor ADP.
Economists had forecast around 1.9 million, with a range between 750,000 and 3.3 million, according to Econoday. In a sign of the extreme levels of uncertainty around jobs numbers in the pandemic era, economists surveyed by Dow Jones forecast a 1 million jobs gain.
The economic disruption from the coronavirus has made it far more difficult to measure or predict changes in the U.S. labor market. ADP’s recent numbers have been off by millions when compared with the Labor Department’s monthly report on the employment situation. In June, for example, ADP saw private payrolls expanding by 2.369 million a few days before the official report said payrolls expanded by 4.8 million, almost all of which was private sector employment.
“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.”
Large businesses, those with over 500 workers, added 129,000, ADP said. Medium-sized businesses with more than 25 but fewer than 500 workers shed 25,000. Smaller businesses added 63,000.
The goods-producing sector added 1,000 jobs, with manufacturing’s addition of 10,000 somewhat offset by a contraction of 8,000 in construction and 1,000 in mining.
The services sector expanded by 166,000 jobs, with professional and business services logging in the strongest growth at 58,000. Financial services, however, shed 18,000 jobs. Information dropped by 1,000.
The June report was revised up to show that businesses added 4.3 million jobs in the month, up from the initial ADP report of 2.4 million. ADP’s revised number is still below the Labor Department’s initial June estimate.
The stock market seemed to largely discount the ADP report Monday, with futures continuing to indicate rising stock prices after the report came out at 8:15 a.m. Tuesday morning. Alternatively, traders may think that bad news on the jobs market could spur Congress to action on a coronavirus release bill, ultimately boosting the economy and justifying higher prices for stocks.