U.S. companies created far fewer jobs than expected in August as the Covid resurgence coincided with cutbacks in hiring, according to a report Wednesday from payroll services firm ADP.
Private payrolls rose just 374,000 for the month, well below the Dow Jones estimate of 600,000 though above July’s 326,000, which was revised downward slightly from initial 330,000 reading.
Most of the new jobs came from leisure and hospitality, which added 201,000 positions in a somewhat hopeful sign that an industry beset by a labor shortage continues to recover.
Education and health services combined to add 59,000 for the month as hospitals in some parts of the country were swamped with virus cases and schools begin to reopen.
“The delta variant of COVID-19 appears to have dented the job market recovery,” said Mark Zandi, chief economist at Moody’s Analytics, which works with ADP on the report. “Job growth remains strong, but well off the pace of recent months. Job growth remains inextricably tied to the path of the pandemic.”
The apparent letdown comes at a pivotal time.
Following a robust recovery from the shortest but steepest recession in U.S. history, economic data of late has been disappointing, possibly reflecting pullbacks from this summer’s surge of the Covid delta variant. The U.S. has been averaging about 150,000 new cases a day following a burst in July and August.
Markets are awaiting Friday’s nonfarm payrolls report, which is expected to show 720,000 new jobs added and an unemployment rate falling to 5.2%, according to Dow Jones estimates.
Wall Street initially shrugged off the ADP report, with stock market futures still pointing to a higher open. However, major averages were mixed in late-morning trade and government bond yields were little changed.
Differences between job counts
The ADP numbers could be pointing to a softer Labo