By Xavier Fontdegloria

 

Job creation in the U.S. private sector rose slightly in August compared with the previous month but remained subdued, signaling that the increase in Covid-19 cases related to the spread of the Delta variant could be denting the recovery of the labor market.

The U.S. nonfarm private employment increased by 374,000 in August, data from ADP National Employment Report showed Wednesday, missing the 600,000 rise expected by economists polled by The Wall Street Journal.

In July, the U.S. private sector added 326,000 jobs, broadly unchanged from an initial estimate of 330,000.

"Our data ... has highlighted a downshift in the labor market recovery," said Nela Richardson, chief economist at ADP. "We have seen a decline in new hires, following significant job growth from the first half of the year," she said.

Medium-sized businesses, between 50 and 499 employees, added 149,000 jobs in August. Large businesses, those of at least 500 workers, created 138,000 jobs; and small businesses, with a maximum of 49 employees, registered 86,000 payroll gains.

By sector, 329,000 jobs were created among services providers. Among those, 201,000 were added in the leisure and hospitality sector. Service providers continue to lead growth in job creation, although the Delta variant creates uncertainty for this sector, Ms. Richardson said.

Jobs in the goods-producing sector were up by 45,000, with 30,000 in construction, 9,000 in natural resources and mining, and just 6,000 in manufacturing, ADP said.

Despite the slowdown, job gains are approaching four million this year, yet still seven million jobs short of pre-pandemic levels, Ms. Richardson said.

The report, carried out by the ADP Research Institute along with Moody's Analytics, is based on data through the 12th of the month.

The U.S. Department of Labor is expected to release its employment report for August, which covers the same period as the ADP National Employment Report, on Friday. Economists polled by The Wall Street Journal are expecting it to show nonfarm payrolls up by 720,000 for the month and the unemployment rate down to 5.2%. The ADP series can diverge considerably from the Labor Department's data on a monthly basis.

 

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

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(END) Dow Jones Newswires

September 01, 2021 08:48 ET (12:48 GMT)

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