The latest ADP employment report shows that the private sector gained 2,369,000 jobs in June. May figures saw a huge upward revision to 3.06 million jobs added compared 2,760,000 jobs lost as originally reported the month before. Small businesses saw most of the growth in June, with most of the gains in the services sector accounted for most of the growth in June. The US economy is slowly showing signs of recovery from the economic downfall that began in March.
- The private sector added 2.36 million jobs in June vs. 3.06 million in May and 3.0 million expected.
- Most of the growth was in the services sector, and small businesses added the most jobs.
- May’s figures were revised upward by over 5.7 million jobs.
Small business of 49 staff or fewer added 937,000 jobs in June. Mid-sized businesses with a headcount between 50 and 499 added 559,000 jobs, and large businesses added 873,000 jobs. 457,000 of the new jobs were in the goods-producing sector with 1.91 million in services. In the goods-producing sector, construction saw the most growth with 394,000 jobs followed by 88,000 new jobs in manufacturing. Mining and natural resources, on the other hand, lost 26,000 jobs.
In services, leisure and hospitality saw the most growth with 961,000 new jobs. The leisure and hospitality segment was hit particularly hard by COVID-19 lockdown procedures. Trade, transportation and utilities added 288,000 jobs, followed by education and health with 283,000. The “other services” segment added 215,000 jobs. Professional and business services added 151,000, financial activities added 65,000, and information lost 50,000 jobs.
US private employment continued to bounce back in June at a strong pace via ADP data: https://t.co/DIwxBvJQfP The rebound slowed and grew by less-than-expected. Unclear if this is a warning sign for the economy's bounce-back, although April's huge upside revision is encouraging: pic.twitter.com/4E0bWfWoPN
— James Picerno (@jpicerno) July 1, 2020
The upwardly revision in May’s figures comes as a major surprise, and highlights the inaccuracy of labor market figures amid the chaos of the coronavirus pandemic. Government systems are overwhelmed, making it difficult to track the economic recovery that appears to be underway. However, a new wave of coronavirus cases across densely populated areas such as in California, Texas, and Florida has caused local authorities to re-evaluate their reopening procedures. Cases in Florida recently surpassed those for the entire nation of Canada.
Consumer confidence has improved alongside the housing market, while the labor market has showed a fairly consistent decline in the number of Americans making unemployment insurance claims each week. However, estimates show that around 20 million more Americans are unemployed now compared to the pre-pandemic labor market.
The ADP report, which is developed jointly with Moody Analytics, comes ahead of tomorrow’s more detailed government employment report which is estimated to show 2.9 million jobs added in June. The ADP report often misses the mark when estimating private payrolls due to differences in the way the government and the ADP compile their data.
“Small business hiring picked up in the month of June,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “As the economy slowly continues to recover, we are seeing a significant rebound in industries that once experienced the greatest job losses. In fact, 70 percent of the jobs added this month were in the leisure and hospitality, trade and construction industries.”
Gold prices have ticked downward following the release of the ADP report. Spot gold last traded at $1,779.04/oz, down -0.16% with a high of $1,789.10/oz and a low of $1,777.66/oz. Prices are trading within a tight range after hitting and 8.5 year high overnight. Geopolitical tensions with US and Russia may have contributed to stronger gold prices, along with the rise of more COVID-19 cases in the US.
The Trump administration’s leading health expert warned that the US is “headed in the wrong direction” when it comes to handling the virus, adding that new cases could reach 100,000 per day unless the public takes more caution against infection. The US is now reporting approximately 40,000 new cases per day.