ADP Says U.S. Firms Add 2.37 Million Jobs, Fewer Than Forecast
U.S. companies added fewer jobs than expected in June as business reopenings expanded.
(Bloomberg) -- U.S. companies added fewer jobs than expected in June as business reopenings expanded, adding to signs the economic recovery is cooling following a quick start.
Businesses’ payrolls increased by 2.37 million in June following a revised 3.07 million gain in May that was previously reported as a decline, according to ADP Research Institute data released Wednesday. The median projection in a Bloomberg survey of economists called for a 2.9 million rise in June.
The hiring reflects a rebound in economic activity following pandemic-related shutdowns that brought an end to the longest-running expansion earlier this year. While fiscal and monetary stimulus are helping the economy regain its footing, a gradual improvement in demand amid a pickup in coronavirus cases indicates the job market will take time to recover to pre-recession levels.
Mark Zandi, chief economist at Moody’s Analytics, which works with ADP to compile the report, cautioned that “there is no information” in the May revision, which “simply reflects the benchmarking of the ADP number” to official figures from the Bureau of Labor Statistics. Those numbers showed a 3.1 million gain in May private payrolls, which Zandi said is “likely significantly overstated” given survey problems and because businesses likely reported job totals from the wrong part of the month.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note that people should “ignore the huge upward revision” in the ADP data.
ADP said service-provider employment climbed 1.91 million, while payrolls at goods producers increased 457,000 in June. The leisure and hospitality industry took on 961,000 workers, while construction firms added 394,000. In health care, employment rose by 246,000. Three industries -- mining, information and management -- registered declines in payrolls.
The data precede the official jobs report on Thursday, which is forecast to show private payrolls jumped by another 3 million in June. The unemployment rate is expected to continue to fall from its April peak, but the size of that decline may be limited by Labor Department efforts to resolve a misclassification issue that has caused the rate to understate the true degree of joblessness during the pandemic.
“As the economy slowly continues to recover, we are seeing a significant rebound in industries that once experienced the greatest job losses,” Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said in a statement. “In fact, 70% of the jobs added this month were in the leisure and hospitality, trade and construction industries.”
Payrolls at small businesses increased 937,000 and large businesses added 873,000 jobs. Medium-size businesses boosted payrolls by 559,000.
ADP’s payroll data represent firms employing nearly 26 million workers in the U.S.
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