US adds 428,000 private jobs in August, below expectations: ADP

The US private sector created 428,000 new jobs in August, payroll services firm ADP said on Wednesday, far less than analysts expected as the economy attempts to rebound from Covid-19.

Large businesses with more than 1,000 employees made up more than half of the gains, and the bulk of the new jobs were in services firms, which were hard-hit by shutdowns to stop the virus's spread.

Manufacturing added just 9,000 jobs last month and has recouped less than half the positions lost in March and April when the pandemic struck.

"Job gains are minimal, and businesses across all sizes and sectors have yet to come close to their pre-COVID-19 employment levels," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

The US Labor Department has reported tens of millions of layoffs since the business shutdowns began in mid-March, but firms have begun to rehire as states and cities ease those regulations in an attempt to get the world's largest economy back online.

The ADP data is seen as a preview of the government jobs report for August due out Friday, which is expected to show the unemployment rate decreased from the 10.2 percent posted in July along with 1.3 million private job gains.

But Rubeela Farooqi of High Frequency economics said the report shows underlying weakness in the private sector, and "a sharp slowdown in payrolls in August would be a warning signal about the sustainability of job gains especially against a backdrop of ongoing interruptions to activity that raise the chance of business failures and permanent layoffs."

Congress passed the $2.2 trillion CARES Act stimulus package to support the economy as the pandemic arrived, which included loans and grants to small businesses. But much of that money has run out, and lawmakers are deadlocked on a new bill that could extend it.

The ADP report said small businesses hired just 52,000 people in August, while medium businesses with between 50 and 499 employees added 79,000 jobs.

Education and health services added 100,000 jobs, as some school systems reopened, while leisure and hospitality added 129,000 -- still far from regaining the 7.7 million positions lost when the sector all but closed when the pandemic hit.

Information was the only sector to report a loss, of 1,000.

© 2020 AFP