The US ADP jobs data reported fewer jobs created than expected in August. Private companies only added 374,000 new jobs in August. The Dow Jones estimate was 600,000. However, the number fell far below this estimate.
The fewer jobs added as due to less hiring by companies due to the resurgence of Covid-19 infections.
The leisure and hospitality industries added 201,000 jobs which was the most significant contributor to the number. This indicates promising recovering of an industry burdened with labor shortages.
The educational and health services added 59,000 jobs to the ADP nonfarm payrolls. Schools re-opened hospitals swamped with new virus infections.
Chief economist at Mood’s Analytics, Mark Zandi, said that the delta variant had dented the labor market. The growth is still solid; however, it is off track from the recent month’s pace. And the pandemic has a significant impact on the growth of jobs.
The Covid-19 pandemic created a short but steep recession in the US, although recovery has been robust. The US had on average 150,000 new infection cases a day in July and August.
The focus is on the nonfarm payroll report expected this Friday. The estimate is an addition of 720,000 new jobs and the unemployment rate to reduce by 5.2%.
Difference between ADP and Labor department counts
The average number of jobs added per month according to the ADP nonfarm employment is 495,000, but the Labor Department had an average of 617,000 during the same month. And the official count in July was 943,000, which was far off the ADP’s count of 326,000. Showing the two reports are very different.
According to Goldman Sachs, the forecast for Friday’s NFP is below the growth of 600,000
The most significant contributor to the new jobs was from small companies. Those with staff between 50 and 499 added 149,000 vs more giant corporations that added 138,000.
The Federal Reserve is monitoring job growth carefully. Since their mandate is to maximize employment, a strong jobs report will push them to start tapering their asset purchases.