WASHINGTON: US private payrolls increased far less than expected in July as shortages of workers and raw materials constrained hiring in the manufacturing and construction industries.
The fewest job gains in five months shown in the ADP National Employment Report on Wednesday suggested some downside risk to economists’ expectations for another month of solid payrolls growth when the government publishes its more comprehensive, and closely watched employment report for July on Friday. “It suggests that labor shortages are still acute,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto. “The ADP is not always a good predictor of the official nonfarm payroll employment figures but, for what it’s worth, it suggests a clear downside risk to the consensus forecast.” Private payrolls rose by 330,000 jobs last month, less than half of the 695,000 that had been anticipated by a Reuters survey of economists. Data for June was revised down to show 680,000 jobs added instead of the initially reported 692,000. The ADP report is jointly developed with Moody’s Analytics Employers are struggling to find willing workers to fill a record 9.2 million job openings even as 9.5 million people are officially unemployed, a disconnect caused by the pandemic. Lack of affordable child care and fears of contracting the coronavirus have been blamed for keeping workers, mostly women, at home. There have also been pandemic-related retirements as well as career changes.
Scarce raw materials, especially in the automobile sector, are hampering production. Though nearly half of the population has been fully vaccinated against COVID-19, boosting demand for workers in the labor-intensive services sector, new cases are surging across the country, driven by the Delta variant of the coronavirus. The slowdown in hiring last month was across all business sizes and industries.
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