In July, the U.S. private sector saw a significant surge in job numbers, adding a remarkable 324,000 jobs and exceeding all expectations, according to reports from payroll processing firm ADP and the Stanford Digital Economy Lab. This robust job growth, which surpassed the Dow Jones consensus estimate of 175,000, provides a positive outlook for the U.S. job market, even amidst the Federal Reserve's efforts to slow down the economy and curb inflation.
The leisure and hospitality sector led the growth with a significant 201,000 job surge, including positions in hotels, restaurants, bars, and affiliated businesses. Other industries also contributed to job gains. Information services added 36,000 positions, trade, transportation, and utilities grew by 30,000, and other services, which encompass activities like dry cleaning and housekeeping, contributed 24,000 jobs. However, goods producers showed a more modest performance, with just 21,000 jobs added. While natural resources and mining increased by 48,000 positions, manufacturing experienced a loss of 36,000 jobs. The construction industry was responsible for adding the remaining 9,000 jobs.
The ADP report also highlighted that the majority of job gains were concentrated in small firms with fewer than 50 employees, which added 237,000 positions. Companies with 50 to 499 employees contributed 138,000 jobs, while larger firms experienced a loss of 67,000 jobs.
In terms of wages, the report indicated an annual increase of 6.2%, which exceeds the long-term average but represents the lowest growth rate since November 2021. This data implies that wage growth has been slowing down, but job losses have not been widespread.
The ADP report serves as a precursor to the more widely followed nonfarm payrolls count, which is scheduled to be released by the Labor Department's Bureau of Labor Statistics on Friday. It is essential to note that the numbers from ADP and the BLS can differ significantly, as seen in June when ADP reported 455,000 jobs added, significantly higher than the BLS figure of 209,000.
Overall, the ADP report paints a positive picture of the U.S. job market, with the private sector demonstrating remarkable resilience and growth despite economic uncertainties. The upcoming government report is eagerly awaited to further assess the state of the labor market.
