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US private hiring slows sharply in July to 330,000: ADP

·2-min read

Private hiring by American firms slowed sharply in July to 330,000, with dramatically lower gains in the construction and leisure and hospitality sectors, according to payroll services firm ADP.

The result was far smaller than economists had expected and less than half of the 680,000 positions gained in June, which could be a worrisome sign ahead of the government's monthly jobs report due out Friday.

"The labor market recovery continues to exhibit uneven progress, but progress nonetheless," ADP chief economist Nela Richardson said in a statement.

As pandemic restrictions have eased, allowing businesses like hotels and restaurants to reopen, the hard-hit leisure and hospitality sector has been hiring workers at a brisk pace since March, but the ADP report showed a gain of just 139,000 jobs last month -- the biggest of any sector by far but less than half of June's figures.

In recent weeks, rising infections from the fast-spreading Delta variant of Covid-19 have created uncertainty and caused some areas of the United States to again put in place mask-wearing rules.

"The slowdown in the recovery has also impacted companies of all sizes. Bottlenecks in hiring continue to hold back stronger gains, particularly in light of new COVID-19 concerns tied to viral variants," Richardson said.

"These barriers should ebb in coming months, with stronger monthly gains ahead as a result."

In the dominant US services sector, hiring slowed in the trade, transportation and utilities professions, and in healthcare and education, while manufacturing added just 8,000 jobs and construction 1,000 following four months of double-digit gains.

Economists are projecting employment gains of over 900,000 and as much as a million in the key Labor Department report, and though the ADP data are not always in sync with the official figures, the big miss could foretell weak monthly hiring overall.

Rubeela Farooqi of High Frequency Economics noted the weakness in the ADP report, but said "job growth is set to pick up over coming months as the factors that are restraining labor supply presently -- health concerns, child-care, supplemental unemployment benefits -- ease."

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