ADP: Private sector added only 179,000 jobs in July

Don’t expect much in the way of happy surprises in Friday’s jobs report from BLS. The US economy has barely lifted its head in two straight quarters, according to the Bureau of Economic Analysis’ GDP reports, and the jobs situation doesn’t look much better. Payroll service giant ADP estimates that the US economy only added 179,000 jobs in July, the fourth straight month of sub-200K job creation growth:

Private sector employment increased by 179,000 jobs from June to July according to the July ADP National Employment Report® . Broadly distributed to the public each month, free of charge, the ADP National Employment Report is produced by the ADP Research Institute® in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. …

Payrolls for businesses with 49 or fewer employees increased by 61,000 jobs in July, down from 86,000 in June. Employment at companies with 50-499 employees increased by 68,000 jobs, up from last month’s 56,000. Employment at large companies – those with 500 or more employees – increased by 50,000, up from June’s 34,000. Companies with 500-999 employees added 16,000 and companies with more than 1,000 employees added 33,000 in July.

Goods-producing employment was down by 6,000 jobs in July, following June losses of 28,000. The construction industry lost 6,000 jobs, following June losses of 4,000 jobs. Meanwhile, manufacturing gained 4,000 jobs after losing 15,000 the previous month.

The report’s chart of job creation over the past year shows an almost unbroken level of stagnation:


Just as a reminder, the rate of population growth and the current (poor) workforce participation rate requires an additional 135-150,000 jobs a month to be created just to remain even. Assuming that the BLS data will roughly match ADP’s findings, we’re barely keeping pace — and we haven’t seen a hint of breakout job creation all year.

For some reason, Yahoo News calls this “solid job growth”:

So does the AP’s Christopher Rugaber:

U.S. companies added 179,000 jobs in July, according to a private survey, a steady gain suggesting that hiring remains healthy after a sharp fall-off in the spring.

Payroll processor ADP said Wednesday that last month’s job growth was driven by services companies — ranging from retailers to shipping firms — which added 185,000 positions. Construction companies, by contrast, cut jobs. And manufacturers added a meager 4,000 positions.

The report showed that many businesses are still hiring even as economic growth has remained sluggish. The additional jobs could help keep Americans spending and support an acceleration of the economy in the second half of the year. …

Still, the ADP figures cover only private businesses, and they often diverge from the government’s official jobs reports for the same month. Economists have forecast that the government’s employment report for July, to be released Friday, will show a gain of 175,000 jobs and that the unemployment rate will dip to 4.8 percent from 4.9 percent.

That would be below June’s sizzling gain of 287,000 jobs. But it would underscore the notion that hiring has recovered after plunging to just 11,000 added positions in May and a modest 144,000 in April.

Well, YMMV, but 179K in a healthy recovery would look much differently than it’s being viewed here. Stacked up against the glum GDP numbers in the first two quarters, 179K to the upside might seem like a breath of fresh air. Objectively, it still looks like an economy that’s going nowhere fast — which is exactly how CBS Money Watch characterized it yesterday:

They are two of the scariest words in the English language, often heard as the engine room is starting to flood or the parachute fails to deploy: “Don’t panic.” And that was the message among economists trying to make sense of how it is, exactly, that the U.S. could be slowing, when most forecasters had expected it to be speeding up by now.

Time to lower the lifeboats? Not quite. But the economic seas are starting to look ominously rough. Let’s consider why the situation is worrying.

First, it is clear that the economy is much weaker than we thought. As Deutsche Bank economists note, over the past four quarters the non-consumer portion of the economy, notably businesses (you know, the ones that hire people), has grown at a rate of -0.2 percent. That’s recession territory.

A number of economists are now also ratcheting back their forecasts for full-year growth to less than 2 percent, or what many experts think is the economy’s “stall speed.”

ADP is seen as a harbinger, but an imperfect one, of the BLS data. Perhaps we’ll get a surprise on Friday, but the GDP reports and the factors Alain Sherter highlights in this analysis suggest that people should bet the under.

Join the conversation as a VIP Member

Trending on HotAir Video

John Sexton 10:00 PM on June 02, 2023