The monthly ADP Employment Report was released Wednesday and it shows 200,000 private sector jobs were added to the U.S. economy in July. In addition, ADP revised last month’s report upward. Now that all data is in, ADP says 198,000 jobs were actually added in June up from the 188,000 reported at the time.
This news follows on a report that GDP grew at an annual rate of 1.7% –higher than expected.
Most of the ADP-reported employment gains—177,000 of the 200,000 jobs—were added in service providing industries. This is always the case because our economy is no longer based on making things. In fact, according to ADP the manufacturing sector lost 5,000 jobs. Other goods producing companies, however added 22,000 jobs, and the construction industry, fueled by a pent-up housing demand, added 22,000 new workers.
“The U.S. private sector added a total of 200,000 jobs during the month of July, with businesses of all sizes contributing to the overall gain and small businesses generating the greatest share, just as they did in the previous month,” Carlos A. Rodriguez, president and chief executive officer of ADP said in a release.
The report showed that small businesses did the most hiring in July. Companies with fewer than 49 employees added 82,000 jobs in July. Most of these—51,000—were in very small businesses with fewer than 20 workers whereas businesses with 20-49 workers added 31,000. The vast majority of these jobs were added in businesses in the service sector.
Employment levels among medium-sized companies with 50-499 employees rose by 60,000, while employment at large companies – those with 500 or more employees – increased by 57,000.
Mark Zandi, chief economist of Moody’s Analytics, said in a release, “Job growth remains remarkably stable. Businesses are adding to payrolls in most industries and across all company sizes. The job market has admirably weathered the fiscal headwinds, tax increases and government spending cuts. This bodes well for the next year when those headwinds are set to fade.”
The 200,000 July jobs reported by ADP is considerably higher than the 128,000 reported in July 2012. It is the third largest total in the last year, down from the 276,000 in November, which reflected temporary holiday employment, and down slightly from the 209,000 reported in December, which also reflected temporary employment.
Last year, the 128,000 jobs in July were followed by a paltry 73,000 in August. Many economists believe that we are dodging the summer slowdown. However, when congress returns for yet another undeserved vacation, it is likely to take a wrecking ball to the economy with threats to shut down the government and saber rattling that it may refuse to raise the debt ceiling.
The “official” jobs report will be out Friday. That is the one compiled by the Bureau of Labor Statistics. That report includes public sector jobs whereas ADP is strictly private sector jobs. The two reports often differ based on the methodology of collecting the data, and the time frame in which the data was reported. However, over the long haul, the reports are essentially consistent.
The ADP National Employment Report is produced monthly and shows the change in total U.S. nonfarm private employment. The data is derived from actual, anonymous payroll data of client companies served by ADP®, a provider of human capital management solutions. The report, which measures nearly 24 million U.S. workers, is produced by the ADP Research Institute® in collaboration with Moody’s Analytics, Inc.
Although the news shows that the economy is adding jobs, the number of jobs is not sufficient to drastically lower the unemployment rate. That is why the president is continuing to push a jobs plan, which Congress still refuses to act on. To reduce unemployment, an average of 150,000 more jobs need to be added each month. However, given where we came from, 200,000 jobs is encouraging.
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