According to the data released by ADP, a well-known provider of human resource services, the number of private payrolls in America increased by 122,000 in the month of July. This rise, however, failed to meet the expectations of financial analysts and economists, who were projecting an average increase of 150,000 jobs.
The service-providing sector bore most of the brunt of this slow job growth, with the addition of only 118,000 jobs, nearly thirty percent below the predictions. Within this broad category, the professional and business services subcategory was arguably the hardest hit, seeing a mere increase of 17,000 jobs, significantly lower than the anticipated figures.
Education and health services sectors experienced the same sluggish growth, with a meager addition of 48,000 jobs. The leisure and hospitality sector saw a marginal increase of 27,000 jobs – another figure that falls short of expectations.
Contrarily, the goods-producing sectors added a decent volume of 4,000 jobs, going somewhat against the job growth trend noticed in July. Among them, the manufacturing sector was able to add 12,000 jobs. This is noteworthy since the manufacturing sector is commonly identified as an economic benchmark due to its significant contribution to the American economy.
Even though the construction sector lost 1,000 jobs, the mining and natural resources sector bounced back by matching the loss with an addition of 1,000 jobs.
Regional analysis shows that the West was leading in terms of new job additions with 49,000 jobs, followed by the South which accounted for 43,000 jobs. The Midwest and Northeast trailed, adding 16,000 and 14,000 jobs respectively.
The percentage of small businesses (those with fewer than 50 employees), contributing to this job growth, radically decreased as well. It only managed to add 11,000 jobs in July, far less than the average monthly gain of 58,000 jobs. On the other hand, medium-sized businesses (those with 50-499 employees) added a robust 67,000 jobs and large businesses contributed with 44,000 jobs.
In the face of these figures, it’s important to consider the factor of labor shortages caused by the pandemic. Businesses, particularly those in the service sector, have struggled to fill vacancies due to workers’ concerns about health safety, childcare responsibilities, and enhanced unemployment benefits.
Lastly, it needs to be noted that the ADP’s monthly private-sector jobs report is often seen as a preliminary indicator of the labor market’s health, and is closely monitored by policymakers and investors. However, it is not always a reliable predictor of the comprehensive government jobs report issued by the Bureau of Labor Statistics, which includes both public and private sector employment data. Hence, the picture painted by the ADP report needs to be viewed with an eye for the upcoming government report.
In conclusion, while the private payroll growth of 122,000 in July is less than expected, it is a signal of the efforts taken by the economy to recover amidst challenging factors. Further growth will depend on the overcoming of labor shortages and the health trajectory of the nation. Therefore, while less than satisfactory, this growth cannot be deemed disappointing under the prevalent conditions.