Businesses added robust 219K to payrolls in July, report says
U.S. hiring got off to a fast start in the second half of 2018, according to a private report, potentially signaling sturdy job growth will continue despite worker shortages and growing trade worries.
Payroll processor ADP said Wednesday businesses added 219,000 jobs in July, signaling the government this week could report a third consecutive month of strong employment gains.
Economists surveyed by Bloomberg expected ADP to count 186,000 new private-sector jobs. They estimate the Labor Department on Friday will report 190,000 payroll gains in the public and private sectors.
Monthly job growth has averaged 215,000 through the first half of 2018, Labor figures show. That’s well above the 170,000 or so economists expected in light of a 4 percent unemployment rate that’s near an 18-year low, making it tough for employers to find workers.
The strong performance can be at least partly traced to federal tax cuts and spending increases and may not last as businesses start to feel the effects of U.S. trade conflicts with other countries, says Mark Zandi, chief economist of Moody’s Analytics, which helps ADP compile the report.
“The job market is booming, impacted by the deficit-financed tax cuts and increases in government spending,” Zandi said. “Tariffs have yet to materially impact jobs, but the multinational companies shed jobs last month, signaling the threat.”
Industries that are hiring
Health care led the job gains with 49,000. Professional and business services added 47,000; leisure and hospitality, 37,000; and trade, transportation and utilities, 21,000. Manufacturers added 23,000 jobs amid a strong U.S. economy and a surge in oil drilling. And construction added 17,000 despite severe worker shortages.
Small-business hiring picks up
Small businesses added 52,000 jobs; midsize companies, 119,000; and large ones, 48,000.
In the tight labor market, small businesses are struggling to compete with larger companies that typically offer better pay and benefits. But after weak job gains in June, small business hiring accelerated last month.
What it means
ADP tries to forecast Labor’s privatesector job gains and generally tracks similar trends but often varies from it substantially. In June, ADP reported 177,000 private-sector employment gains while Labor tallied 202,000.
The solid showing seems to indicate that so far the benefits of sweeping business tax cuts are offsetting higher U.S. tariffs on many imports and counter-tariffs by other countries. The question is how long that will continue.