ADP Employment Strength Diminishes in July
by:Tom Moeller
|in:Economy in Brief
Summary
- Two-month change is strongest since last July.
- Service sector hiring remains strong; goods increase weakens.
- Pay increase decelerates.
Nonfarm private sector payrolls increased 324,000 (2.4% y/y) during July after rising 455,000 in June, revised from 497,000. A 173,000 increase was expected in the Action Economics Forecast Survey. The 349,000 average increase during the last three months was the quickest since August.
Growth in median annual pay for "job stayers" eased to 6.2% y/y last month from 6.4% in June and remained below a September high of 7.8% y/y. Last month’s earnings increase was led by 7.2% y/y growth in leisure & hospitality earnings, down from 16.9% y/y growth in March 2022. Education & health services pay increased a lessened 6.7%. Financial sector earnings rose 6.4% y/y, down from 7.8% in November while information sector pay rose 5.5% y/y, below the 8.0% peak in June 2022. Factory sector pay rose 5.7% y/y, down from a high of 7.8% in September 2022. Pay increases for “job changers” decelerated sharply and averaged 10.2% y/y, below the 16.4% peak in June 2022.
Small businesses hiring (1-49 employees) rose 237,000 (1.5% y/y) following three increases which averaged 2151,000 per month. Employment at firms with 50-499 employees rose 138,000 (4.1% y/y), about the same as it did in each of the prior three months. Employment at large-sized firms fell 67,000 (+0.8% y/y) last month, the third straight month of decline.
By industry group, goods-producing employment rose 21,000 (2.7% y/y) after a 124,000 June rise and a 107,000 May increase. Hiring in the natural resource & mining sector strengthened 48,000 (20.8% y/y) following five straight months of strong gain. Construction employment improved 9,000 (4.8% y/y), also following five months of firm increase. Factory sector jobs declined 36,000 (-0.9% y/y), the fifth consecutive monthly decline.
Service-producing jobs rose 303,000 last month (2.3% y/y) after a 331,000 June surge. The number of leisure & hospitality jobs jumped 201,000 (9.5% y/y) after rising 225,000 in June and 204,000 in May. Information sector employment rose 36,000 (-1.2% y/y) after a two months of decline. Trade, transportation & utilities payrolls rose 30,000 (1.4% y/y) in July, about as they did in each of the prior three months. Education & health service s employment rose 12,000 (2.1% y/y) after increasing 75,000 in June. Education & health care sector employment rose 12,000 (2.1% y/y) after rising 75,000 in June. Professional & business services employment edged 5,000 higher (0.5% y/y) following five straight monthly declines. Elsewhere, payrolls declined. Financial activities employment fell 5,000 (-1.8% y/y), down for the eighth straight month.
By Census region, employment in the Northeast improved 276,000 (7.2% y/y) following a 246,000 June gain. Employment in the West increased 55,000 (2.8% y/y) in July, following a 45,000 June increase. Jobs in the Midwest rose 129,000 (3.2% y/y) after rising 161,000. In the South, the number of jobs declined 144,000 (-0.8% y/y), the sixth consecutive monthly decline.
The ADP National Employment Report and Pay Insights data can be found in Haver's USECON database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
