US private payrolls rise by 330,000 in July – less than half what economists expected

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A man hands his resume to an employer at the 25th annual Central Florida Employment Council Job Fair at the Central Florida Fairgrounds. Paul Hennessy/SOPA Images/LightRocket/Getty Images
  • US private-sector businesses added 330,000 jobs in July, ADP said in its monthly hiring report.
  • The print fell well short of the 683,000-payrolls forecast but still marked a seventh straight gain.
  • More states began cutting enhanced unemployment benefits in July to push more Americans into the workforce.
  • See more stories on Insider’s business page.

The US private sector added much fewer jobs than expected last month as several states began ending enhanced unemployment benefits and COVID cases crept higher, driven by the surging Delta variant.

Private payrolls rose by 330,000 in July, ADP said in its monthly employment report. That compares to a median estimate of 683,000 jobs from economists surveyed by Bloomberg. The print marks a seventh straight month of payroll gains but a sharp slowdown from the previous month’s gains.

The initial June count was revised to 680,000 from 692,000.

The July report is the first to reflect job gains in states that began cutting the federal boost to unemployment insurance ahead of the planned September expiration. Twenty-six states – all but one led by Republican governors – have slashed the benefit early in hopes of driving more unemployed Americans into the workforce.

Insider calculations of UI claims data suggest the early cancellation has been effective at pushing people off of unemployment – but this ADP report indicates that’s not necessarily translating into faster growth in actual jobs.

Filings for unemployment insurance hovered above pandemic-era lows throughout July and ended the month at 400,000, or roughly double the pre-crisis average, and Insider has reported they may never approach their pre-pandemic norm again. Continuing claims, which count Americans receiving unemployment benefits, also wavered after months of steady decline.

And while much of the country’s economy stayed open through July, a sharp rise in COVID cases likely dragged on some hiring plans. Daily case counts began to tick higher at the beginning of the month. By the end of July, the more transmissible Delta variant drove case counts to their highest levels since February.

“When we see increases in case counts, even when it’s from lower levels, there’s that uncertainty that waves a long shadow over the labor market,” Nela Richardson, chief economist at ADP, told reporters on Wednesday. “The overall takeaway is that the recovery is happening, but its path is something we’ve never seen before.”

She continued: “We might see some stronger months and some weaker months as we proceed towards a full recovery.”

July’s biggest employers

The leisure and hospitality sector added the most jobs throughout last month, with a gain of 139,000 jobs. The education and health services sector followed with a 64,000-payroll gain. Both sectors were some of the hardest hit by the pandemic and counted for the bulk of job gains since reopening began in the spring.

Conversely, the information sector shed 1,000 jobs through July. Hiring was nearly flat in the construction and natural resources and mining sectors.

Businesses with between 50 and 499 employees hired the most, posting a 132,000-payroll gain. Firms with more than 500 employees added 107,000 jobs, and companies with fewer than 50 workers gained 91,000 payrolls, according to ADP.

Supply chain pressures continued to weigh on goods-producing industries, particularly in manufacturing and mining, Richardson said.

Labor shortages also dragged on gains in both goods and services sectors, according to ADP. Unemployed workers could “wait it out a little bit” due to support from stimulus payments and enhanced unemployment insurance, Richardson said.

Still, those hiring bottlenecks will probably ease into the fall, she added. As more Americans get vaccinated, schools reopen, and stimulus support lapses, it’s likely labor force participation improves and more workers come off the sidelines, Richardson said.