Private Companies Add Fewer Jobs Than Expected in July

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One gauge of U.S. employment shows that private companies hired half as many people as expected last month, a potential blow to the job market and its summer of high hopes.

Private companies added 329,883 people to their payrolls in July, the smallest single-month total since February, as bottlenecks in hiring held back stronger gains, according to a report released Wednesday by payroll company ADP. The gain was less than half of the 695,000-job gain economists had been expecting. More than one-third of the growth came from 139,000 jobs added in the leisure and hospitality industry.

The ADP report serves as a lead-in to the federal government’s monthly employment report, with July numbers due Friday. ADP’s release measures a smaller portion of the labor market and isn’t always predictive of what to expect from the government’s report. For example, it overstated gains in April and May and understated June’s gain. But the data can indicate the general direction of the labor market, particularly as it continues an uneven recovery from losing 22.4 million jobs during the pandemic-induced recession early in 2020.

There are 6.8 million fewer people on payrolls now than in February 2020, according to U.S. government figures, and hopes were high that a summer boom in hiring could chip away at that deficit. The job market could still be primed for strong growth going forward, economists say, with businesses looking to fill a record number of job openings and factors like lack of child care and expanded unemployment benefits keeping fewer people at home. Oxford Economics projects the government report Friday will show the U.S. added more than 1 million jobs in July, the most since last August, after adding 850,000 in June.

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