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ADP Employment: Slower Growth Amid Delta Variant

August 4, 2021
Bottom Line:   ADP reported July job growth of less than half June's gains as service sector hiring slowed with the delta variant starting to hamper continued summer reopenings.  The leisure and hospitality sector hired just 139k people in July, well below the 332k hired in June and 330k average of the prior three months. The education and healthcare sectors were also notably weaker relative to their recent trends.  Moreover, the trade, transportation, and utility sector saw hiring of just 36k, well below that sector's three-month average of 92k. Overall, this was a disappointing report and likely showed the early impact of the upswing in Covid cases due to the delta variant.  There is scope for a negative surprise relative to expectations of 875k new nonfarm payroll jobs in the national employment report due Friday.
ADP National Employment ROSE by 330k in July, compared with the consensus estimate for a gain of 690k.  Meanwhile, the revisions to the prior 3 months subtracted an additional 15k to the previous estimate. Over the past 12 months, private payrolls have increased by an average of 445k per month, lifting employment to 4.5% ABOVE its year-ago level.
Jobs in Goods-Producing Industries ROSE by 12k jobs as Manufacturing gained 8k workers. Moreover, Construction gained 1k jobs.

Service-Producing Industries
ROSE by 318k jobs with Professional/Business Services hiring 54k workers, Trade/Transport/Utilities adding 37k, and Financial Activities increasing by 9k workers.
Small Firms hired 91k workers, Medium-Sized Firms grew by 132k employees while Large Firms added 106k positions.