U.S. companies added fewer jobs than expected last month, suggesting the labor market rebound remains gradual, with employment well below pre-pandemic levels.
Payroll processor ADP said Wednesday that businesses added 428,000 jobs in August, a figure that before the pandemic would have represented a healthy gain. But the increase represents a small slice of the 12 million jobs that have been lost to the spread of the coronavirus.
ADP said the bulk of the gains were at large companies, which added about 298,000 jobs. Small businesses with fewer than 50 employees gained just 52,000 positions, while medium-size firms — with between 50 and 499 employees — added 79,000 jobs.
“Given the enormous job losses during the viral recession, job growth of around 400,000 per month means that it would take years for the labor market to recover from the coronavirus pandemic,” Gus Faucher, an economist at PNC, said.
[CORONAVIRUS: Click here for our complete coverage » arkansasonline.com/coronavirus]
ADP’s figures do not include government workers and frequently diverge from the Labor Department’s official jobs report. The August jobs report from the government will be released Friday. ADP revised up its July job gain to 212,000, but that is still far below the 1.8 million additional jobs that month reported by the federal government.
Economists forecast that the Labor Department on Friday will report that 1.4 million jobs were added in August, while the unemployment rate is expected to have fallen to 9.8% from 10.2%, according to data provider FactSet.
Economists are cautiously optimistic heading into fall, as more Americans begin returning to work and school, even as U.S. coronavirus cases now surpass 6 million and at least 184,000 Americans have died. Clusters of infections have been reported in newly reopened college campuses and high schools, factories and other workplaces.
“The August job postings demonstrate a slow recovery,” Ahu Yildirmaz, vice president and co-director of the ADP Research Institute, said in a release. “Job gains are minimal, and businesses across all sizes and sectors have yet to come close to their pre-covid-19 employment levels.”
And economic headwinds remain. The Paycheck Protection Program, which helped support employment in recent months, expired in August, and lawmakers have yet to pass another comprehensive stimulus package. Meanwhile, companies continue to announce layoffs almost six months after the covid-19 shutdowns.
Nearly all of last month’s job growth came in service sectors, ADP reported. The 389,000 new positions spanned trade and transportation, leisure and hospitality, and education and health, as the back-to-school season got underway and states continued to ease up on restrictions on travel and business. The goods-producing sector created 40,000 jobs, mostly in construction. Information jobs fell by 1,000.
As of last week, roughly 27 million people are receiving some form of unemployment insurance, according to the U.S. Labor Department.
The slow jobs recovery would seem to contradict the monster advance playing out on Wall Street. The Standard & Poor’s 500 and Dow Jones industrial average chalked up their best August in more than three decades. On Tuesday, the S&P 500 and Nasdaq composite set record highs.
“The recovery in jobs lost in this pandemic recession was always a weak one, especially in service-sector employment like retailing, hotels, and bars and restaurants,” Chris Rupkey, chief financial economist for MUFG, said in an email, “but now for a second month in a row it is looking like the jobs are not going to come back unless there is more stimulus from Washington to bolster economic demand and keep business activity and consumer spending growing.”
ADP’s payroll data represents firms employing nearly 26 million workers in the United States.
Information for this article was contributed by Hannah Denham of The Washington Post; by Reade Pickert of Bloomberg News; and by Christopher Rugaber of The Associated Press.