Private payrolls increased by just 374,000 in August, far short of the 600,000 estimates, ADP says

September 2, 2021: According to a report from payroll services firm ADP, on Wednesday, U.S. companies created far lesser jobs than expected in August as the Covid resurgence coincided with cutbacks in hiring.

In July, private payroll increased by only 374,000 people for the month, which was less than the Dow Jones forecast of 600,000, but more than the previous month’s 326,000, which was revised downward from the initial 330,000 figure slightly.

The majority of the new jobs were created in the leisure and hospitality sector, which added 201,000 positions in a sign that an industry beset by a labour shortage is continuing to recover.

In this month, education and health services combined to generate an increase of 59,000 jobs, as hospitals in a few parts of the country are swamped with virus cases and schools reopen.

“The Delta variant of COVID-19 appears to have dented the job market recovery,” said Mark Zandi, chief economist at Analytics of Moody, working with ADP.

“Job growth remains strong but well off the pace of recent months. Job growth remains inextricably tied to the path of the pandemic,” Mark added.

Following a robust recovery from the shortest but steepest recession in U.S. history, economic data was disappointing, possibly reflecting pullbacks from this summer’s surge of the Covid Delta variant. The U.S. has been averaging about 150,000 latest cases a day following a burst in July and August.

According to Dow Jones estimates, markets are awaiting Friday’s nonfarm payroll report, which is expected to show 720,000 new jobs added and an unemployment rate falling to 5.2%.

Wall Street largely shrugged off the report, with stock market futures still pointing to a higher open.