Payroll gains at U.S. companies slowed sharply in July, suggesting the pickup in coronavirus cases is putting the brakes on the job market and the economic recovery.
The 167,000 in business payrolls last month followed an upwardly revised 4.31 million increase in June, according to ADP Research Institute data released Wednesday. The July increase trailed all estimates in a Bloomberg survey of economists which had a median projection of 1.2 million.
The sharp slowdown in the pace of payroll gains is consistent with other data that show the labor market in danger of regressing after rebounding in the months immediately following the lifting of state lockdowns on businesses. Applications for unemployment benefits have risen for two straight weeks amid a spike in Covid-19 cases that has forced some rollbacks in reopening plans.
“We have seen the slowdown impact businesses across all sizes and sectors,” Ahu Yildirmaz, co-head of the ADP Research Institute said in a statement.
ADP said service-provider employment rose by 166,000, while payrolls at goods producers increased 1,000 in July. Employment in the leisure and hospitality industry, which had gained more than 3 million in the prior two months, rose just 38,000 in July.
The ADP data precede the government’s jobs report on Friday, which is forecast to show private payrolls increased by 1.5 million in July after a 4.8 million gain a month earlier.
Payrolls at small businesses increased by 63,000 last month, while medium-size businesses shed 25,000 jobs. Payrolls climbed 129,000 at large firms.
ADP’s payroll data represent firms employing nearly 26 million workers in the U.S.
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