The numbers: Businesses in the U.S. created a lackluster 374,000 new jobs in August, a new ADP survey found, suggesting the delta strain of the coronavirus depressed hiring last month.
The increase in private-sector jobs was weaker than expected. Economists surveyed by The Wall Street Journal had forecast a 600,000 gain.
ADP sometimes acts as an early-warning system of sorts for the government’s more comprehensive employment survey that comes out a few days later. Yet the two reports also diverge quite sharply from time to time and that’s been especially true during the pandemic.
In July, for example, ADP said 326,000 private-sector jobs were created. The Labor Department reported a much larger 703,000 increase.
Big picture: Forget the month-to-month differences between the ADP and Labor Department job reports. Both show a big increase in private-sector employment since May — more than 2 million new jobs.
It’s no surprise. Companies have a record number job openings to fill and they are trying to hire workers in anticipation that the latest coronavirus flareup will fade.
To be sure, delta has spurred companies to exercise more caution, especially restaurants and other businesses that deal face to face to customers. And it’s caused some consumers to avoid large crowds again.
That probably helps explains the somewhat slow in hiring in August, a notoriously fickle month to assess because so many people go on vacation..
Yet by and large, the economy has held up well and it’s still growing at a fairly strong pace. Hiring is likely to acclerate if delta cases start to decline in the next few months.
Key details: The biggest increase in hiring took place in leisure and hospitality. Hotels, restaurants, entertainment venues and the like added 201,000 jobs. That’s up from 138,000 in July.
That’s the sector that should have experienced the brunt of delta, but it doesn’t seem to have been the case.
Jobs in education and health care rose by 59,000. And construction companies increased payrolls by 30,000.
The rest of the new jobs were scattered across a variety of industries such as manufacturing, finance, transportation and professional work.
Mid-sized businesses created 149,000 new jobs, followed by 130,000 at large companies
Small businesses, which have been hurt the most by the pandemic, only added 86,000 new jobs, ADP said.
The U.S. Labor Department on Friday is expected to report that the economy generated 720,000 new jobs in August. These figures include employment at local, state and the federal government.
Another strong report could nudge the Federal Reserve to move up its plans to start unwinding its easy-money strategy meant to prop up the economy. The central bank has said it plans to do so before the end of the year.
What they are saying? “The ADP survey has had a much more erratic than usual track record versus the initially reported official data since the onset of the pandemic,” said chief economist Joshua Shapiro of MFR Inc. “Thus, there is simply no telling how close ADP’s initial August estimate will prove to be to the results to be reported by the Labor Department on Friday.”
Market reaction: U.S. stocks
were set to open higher in Wednesday trades.