American businesses had another month of strong hiring in July, according to payroll processor ADP.
ADP said Wednesday that private sector payrolls increased by 324,000 workers, far above the 175,000 expected.
The gains were led by a 201,000 jump in the hospitality and leisure sector that includes hotels, restaurants, and bars.
“The economy is doing better than expected and a healthy labor market continues to support household spending,” said ADP chief economist Nela Richardson. “We continue to see a slowdown in pay growth without broad-based job loss.”
The report comes two days before the government releases its own report on employment in July. Economists expect that report will show a gain of 200,000 jobs and a steady unemployment rate at 3.6 percent. The ADP report is no longer aimed at anticipating the Department of Labor figures and is instead intended to provide an independent measure of the labor market. Last month, ADP said the private sector added 497,000 (a figure that was revised down to 455,000 on Wednesday) while the government’s estimate was for 149,000 private sector jobs and 209,000 overall.
Despite the differences in the figures, both the ADP and the government reports have been indicating a labor market that is much stronger than expected in the face of the Federal Reserve’s interest rate hikes.
The services sector created 303,000 for the month, ADP said. Information services businesses added 36,000. Trade, transportation, and utilities added 30,000.
The goods-producing side of the economy produced far fewer jobs. A gain in mining and natural resources of 48,000 was partially offset for a loss of 36,000 in manufacturing. Construction, which has been stronger lately due to a resurgence of home building and building manufacturing plants, added just 9,000 workers.
Wages increased by 6.2 percent from a year ago. That’s the slowest rate of wage growth since November 2021 but still well above a rate consistent with the Federal Reeserve’s goal of two percent inflation.
Even though the ADP estimate has been far above the Department of Labor’s estimate in recent months, over time the two have been close. In the first six months of the year, ADP’s estimates have averaged 256,000 per month and the Labor Department’s 278,000.
Comments are closed.