Survey finds 156,000 new jobs in July
WASHINGTON — U.S. companies added a healthy 156,000 jobs in July with larger firms accounting for most of the gains, a private survey found.
The payroll processor ADP said Wednesday that there was solid hiring in the construction, transportation, health care and leisure and hospitality sectors.
But smaller companies are struggling to find talent after years of robust job growth. The survey counted 11,000 new jobs at its small-business customers, those with up to 49 employees. But ADP’s smallest customers, those with up to 19 employees, cut 18,000 jobs.
The slim overall increase in hiring followed two months of job cuts — small companies cut 13,000 jobs in June and 34,000 in May, ADP said. That followed a
gain of 66,000 in April.
Small-business hiring has been constrained by a confluence of factors. Owners have been conservative about adding to their payrolls since the recession; while in the past they would hire in anticipation of getting more business, now they tend to wait until they have the revenue to justify the hires. They also have struggled along with larger companies to find qualified workers, but because smaller companies generally aren’t able to offer the salaries and benefits that big corporations do, they have a harder time attracting top talent.
Gains in services were led by health care and professional and business services. Goods-producing jobs rose by 9,000 driven by construction, the ADP figures showed.
Mark Zandi, chief economist at Moody’s Analytics, said that the “job market is throttling back” because of factors such as labor shortages and trade tensions that are weighing on business sentiment.
Zandi said that the import taxes imposed by President Donald Trump appear to have caused a decline in manufacturing job growth, which appears to have peaked with monthly gains of 25,000 at the end of last year and have since fallen.
Population growth means the U.S. economy needs to add roughly 100,000 to 120,000 jobs monthly to keep the unemployment rate from rising. Average job gains have declined over the year, but they’re running above a pace that could cause the jobless rate to increase. The tighter labor market could correspond with faster wage growth.
The ADP’s figures don’t include government hiring and frequently diverge from the government’s official report, which is scheduled to be released Friday. Economists expect that report will show the addition of 163,000 jobs.
ADP’s payroll data represent about 411,000 firms employing nearly 24 million workers in the U.S.
In a separate report, the Labor Department reported Wednesday that pay and benefits for all U.S. workers increased 2.7% in the April-June quarter from a year earlier, down from a 2.8% rise in the first quarter compared with a year ago. The 12-month peak so far in this expansion for wages and salaries was a 2.9% gain for the period ending in December of last year.
The unemployment rate fell to a half century low of 3.6% in April and May and ticked up slightly to a still historically low 3.7% in June.
Economists at JPMorgan are forecasting the unemployment rate will tick back down to 3.6 percent in Friday’s government report, a further sign that the current economic expansion, now the longest in U.S. history, is continuing to power along.
The overall economy, as measured by the gross domestic product, slowed to an annual gain of 2.1% in the April-June quarter. While that was down from the 3.1% increase in the first quarter, economists saw the composition of gross domestic product in the spring as healthier and they are forecasting growth will continue at rates around 2% for the rest of the year.
The rise in compensation for the three months ending in June was 0.6 percent, down from the three-month gain for the first quarter of 0.7 percent.
Wages and salaries, the biggest part of employee compensation, rose 0.7 percent while benefits, which cover items such as health insurance and pensions, rose 0.5 percent.