The jobs market went from the best unemployment of our lives to the worst during the COVID-19 instant recession. After trillions of stimulus dollars and as the economy has been allowed to reopen, it turns out that the jobs market has posted a massive recovery.
ADP’s National Employment Report shows that the private sector added 2.369 million jobs in June. Small businesses were the largest factor, adding 937,000 jobs, followed by 873,000 jobs from big businesses of 500 employees and more. The midsized businesses, those with 50 to 499 employees, added 559,000 payrolls in June.
Bloomberg was calling for 3 million additional payrolls in total. While this June report looks great, two issues should be given further consideration.
Small business hiring led the way here, according to the commentary, with a significant recovery being seen in those industries that have endured the largest job losses. ADP pointed out that about 70% of the jobs that were added in June were in the leisure and hospitality industry and in the trade and construction sectors.
The United States is still a post-manufacturing economy, and ADP signaled that 1.912 million payrolls were added in the service-providing industries and just 457,000 came from the goods-producing industries.
As for that first exception, May’s total payroll changes were revised from −2.76 million all the way up to 3.065 million. Revisions of this magnitude are not normal.
As for the severity of that restriction, it appears that the key issue driving up the revision so much was the many businesses still not back open or not fully operational in the first half of May. While it is an extreme revision on the surface, it was also closer to the U.S. Department of Labor’s report of 2.5 million payrolls added.
The second issue, and the more current one, is that the ADP data was from the first half of June. That was prior to the massive spike in COVID-19 cases as the local economies have continued to reopen, and the surge in cases is now tied to younger Americans.
ADP’s payroll data comes from 460,000 U.S. businesses that employ nearly 26 million workers.
This might not set the stage for an equally strong number of nonfarm payrolls in Thursday’s unemployment report from the Labor Department, but Bloomberg was showing an expectation of 3 million total nonfarm payrolls added in the month as well. That said, the official unemployment rate is anticipated to be about 13%.
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