US private payrolls are exceeding expectations; the recovery of the labor market is losing momentum


WASHINGTON (Reuters) – U.S. private employers hired fewer workers than expected for a second straight month in August, suggesting that the labor market recovery was slowing as the COVID-19 pandemic persists and money from the government to support workers and employers is drying up.

FILE PHOTO: A “Now Hiring” sign sits in the window of Tatte Bakery and Cafe in Cambridge, Massachusetts, USA February 11, 2019. REUTERS / Brian Snyder

The moderation in job growth was also signaled by another Federal Reserve report on Wednesday showing that workers on leave are increasingly being permanently laid off in parts of the country.

The bulk of hires last month were from large companies, with small companies showing a slight increase. A weekly unemployment supplement of $ 600 expired on July 31, while a program that gave businesses loans that could be partially canceled if used for employee wages also lapsed.

“The recovery of jobs lost in this pandemic recession has always been weak,” said Chris Rupkey, chief economist at MUFG in New York City. “But for a second month in a row, it looks like jobs won’t come back unless there is more stimulus from Washington to support economic demand and keep business activity and consumer spending growing.”

Private payrolls increased by 428,000 jobs last month, according to ADP’s national employment report. Data for July has been revised upwards to show the hiring of 212,000 jobs instead of the 167,000 originally reported. The revision still left July’s tally out of line with the 1.462 million increase in private employment reported by the government last month.

Economists polled by Reuters had predicted that the private wage bill would increase by 950,000 in August.

The ADP report, jointly developed with Moody’s Analytics, has fallen short of government payrolls since May due to differences in methodology. The ADP report is based on active employees and paid on company payroll.

The Department of Labor’s Bureau of Labor Statistics (BLS) counts workers as employees if they received a paycheck during the week that includes the 12th of the month.

When businesses were closed in mid-March, millions of workers were either laid off or put on leave. Some economists believe that the return of workers on leave when most businesses reopened in May boosted the employment figures reported by the government.

Moody’s Analytics chief economist Mark Zandi told reporters he expected the gap between ADP and BLS private payrolls to narrow in August. The government is expected to release the August jobs report on Friday.

According to a Reuters survey of economists, private payrolls likely increased by 1.250 million jobs in August after increasing by 1.462 million in July. Such a gain would push the non-farm payroll up to 1.4 million jobs last month after an increase of 1.763 million. That would leave the non-farm workforce about 11.5 million below their pre-pandemic level.

Separately, on Wednesday, the Fed’s “Beige Book” report containing anecdotal information on business activity gathered from contacts across the country showed that employment was increasing overall in the districts, with gains mainly in the sector. manufacturer.

But the US central bank said that “some districts have also reported slowing job growth and increased hiring volatility, especially in service industries, with an increase in cases of permanent layoffs due to weak demand.

The Fed also noted that “businesses continued to experience difficulties in finding the necessary manpower, a problem compounded by the availability of child care facilities, as well as uncertainty about the upcoming school year and unemployment benefits.”

“Risks remain on the downside for the labor market recovery,” said Rubeela Farooqi, chief US economist at High Frequency Economics in White Plains, New York.

Wall Street stocks were trading higher. The dollar won against a basket of currencies. US Treasury prices have gone up.


The moderation in employment growth suggested by the ADP report is in line with other indicators of the labor market. Every week, new claims for unemployment benefits hover around a million. Data from Kronos, a workforce management software company, showed seasonally-adjusted job growth continued to stagnate in August, while figures from Homebase, a payroll planning and tracking company, showed little. change in employment last month from July.

“In order for the economy to start adding the number of jobs that continue to be scheduled each month, we must first see a significant and sustained increase in overall shift volume growth,” said Dave Gilbertson, vice -president, strategy and operations at Kronos.

United Airlines (UAL.O) said on Wednesday it was preparing to lay off 16,370 workers on October 1. Airlines received $ 25 billion in stimulus funds from the government in March to pay wages and protect jobs until September.

Large businesses created 298,000 new jobs last month, while small business payrolls increased by 52,000. Medium-sized businesses created 79,000 jobs.

Most of the increase in employment in August was in industries directly affected by the pandemic, including restaurants, recreation and hospitality. There have also been gains in temporary help, reflecting an uncertain economic environment.

Manufacturers hired 9,000 workers.

Reportage de Lucia Mutikani; Montage by Chizu Nomiyama and Andrea Ricci

Our standards:Thomson Reuters Trust Principles.


Please enter your comment!
Please enter your name here