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Economy in Brief

U.S. ADP Nonfarm Private Payrolls Disappoint in July
by Tom Moeller  August 4, 2021

• Increase is roughly half expectations.

• All sectors slow, except manufacturing.

• Industry weakness led by leisure & hospitality.

Job market growth decelerated markedly during July. The ADP National Employment Report indicated that nonfarm private sector payrolls increased 330,000 (4.5% y/y) during July after gaining 680,000 in June, revised from 692,000. A 635,000 rise had been expected in the Action Economics Forecast Survey. The three-month average increase fell to 631,000 from 728,000. Payrolls increased 882,000 in May, revised from 886,000.

Small-sized payrolls led the July deceleration with a 91,000 gain (5.3% y/y) following a 203,000 rise in June. Medium-sized payrolls rose 132,000 (7.1% y/y) after improving 228,000 in June. Large-sized payrolls grew 106,000 (3.0% y/y) in July after strengthening 249,000 in June.

Within industry sectors, private service employment increased 318,000 in July (4.8% y/y) after improving 624,000 in June. It was the weakest rise since February. Last month's slowing was led by a 139,000 rise (14.5% y/y) in leisure & hospitality hiring which followed a 332,000 June gain. It also was the smallest increase since February. The number of education & health services jobs rose 64,000 in July (4.1% y/y) after a 111,000 rise in June. Jobs in trade, transportation & utilities rose 36,000 in July (3.1% y/y) after gaining 70,000 in June. It was the weakest gain in six months. A 54,000 rise (3.7% y/y) in the number of professional business services jobs was roughly steady with increases in the prior two months. Jobs in financial services improved 9,000 (1.4% y/y) after rising 7,000 in June. The number of information sector jobs fell 1,000 (-0.2% y/y), the same as in June.

Employment amongst goods-producing firms increased 12,000 (3.2% y/y) in July following a 56,000 June rise. It was the weakest increase since a decline in February. The number of factory sector jobs improved 8,000 last month (2.6% y/y) after rising 16,000 in June and by roughly 40,000 in each of the three months before that. The size of construction sector payrolls edged 1,000 higher in July (3.8% y/y) following a 36,000 increase. Employment in the natural resource & mining sector rose 3,000 (6.9% y/y) after a similar increase in June.

The Automatic Data Processing Research Institute survey covers 411,000 companies and includes about one-fifth of U.S. private payroll employment. The data are processed by Moody's Analytics Inc., then calibrated and aligned with the BLS establishment survey data. The ADP data cover private sector employment only.

The ADP National Employment Report data can be found in Haver's USECON database. Historical figures date back to 2001 for private employment and the industry breakdown, and 2005 for the business size breakout. The expectation figure is available in Haver's AS1REPNA database.

ADP/Moody's National Employment Report Jul Jun May Jul Y/Y % 2020 2019 2018
Nonfarm Private Payroll Employment (m/m chg, 000s) 330 680 882 4.5 -6.4 1.4 1.9
 Small Payroll (1-49) 91 203 294 5.3 -5.8 0.2 0.8
 Medium Payroll (50-499) 132 228 303 7.1 -7.2 1.9 2.2
 Large Payroll (>500) 106 249 285 3.0 -6.3 1.7 2.4
Goods-Producing 12 56 97 3.2 -4.1 1.5 3.0
  Construction 1 36 43 3.8 -2.5 2.5 4.4
  Manufacturing 8 16 44 2.6 -4.7 1.0 2.1
Service-Producing 318 624 785 4.8 -6.8 1.3 1.7
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