U.S. companies shelved their plans to re-hire displaced workers in July, with private payrolls increasing by only a fraction of what economists had been expecting, ADP reported on Wednesday.
Private payrolls grew by 167,000 last month, according to ADP, well below the 1.034 million expected from economists surveyed by FactSet and a big drop from the revised 4.3 million positions created in June, though the June number was revised significantly higher from an originally reported 2.37-million gain.
The numbers paint a near-real-time picture of businesses struggling to re-open and re-hire workers amid the now five-month-long pandemic that has thrown a wrench in the U.S. economic wheel -- and has also forced businesses to re-assess if and how they can operate.
Indeed, while a rearview mirror, the numbers are a grim prelude to July’s non-farm payroll report, to be released by the Labor Department this Friday. Analysts polled by FactSet are expecting some 2 million jobs to have been created last month, following 4.8 million positions created in June. That’s still a far cry from 22.5-millon-plus jobs lost since March.
"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."
By category, businesses with between 50 and 499 employees reported an outright decline of 25,000, for the month. Big business added 129,000 jobs, while firms with fewer than 50 workers added 63,000, ADP said.
All but 1,000 of the jobs came from the services sector, as professional and business services led with 58,000. The hospitality sector, which has borne the brunt of the pandemic and ensuing shutdowns, posted 38,000 new positions.