U.S. businesses appeared to slow their hiring dramatically in July, adding only 167,000 workers to their private payrolls — a steep drop from analysts’ expectations that could add new urgency to stalled congressional talks over another round of federal coronavirus aid.
The numbers reported Wednesday by ADP mark a significant departure from the more than 1 million jobs that some economists had predicted and a sharp falloff from hiring gains reported just a month prior, suggesting almost no sector of the U.S. economy has been untouched by the apparent new slowdown.
“The labor market recovery slowed in the month of July,” Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said in a statement. “We have seen the slowdown impact businesses across all sizes and sectors.”
Economists cautioned the new hiring data may offer an incomplete picture of the nation’s labor market. ADP on Wednesday also revised its numbers from June, finding employers added 4.3 million new jobs compared with the roughly 2.3 million the firm initially estimated. The Trump administration is set to release more robust employment data Friday, which does not always mirror ADP’s figures.
Still, ADP’s findings reflect a growing belief that recent economic improvements have been tempered as the country’s coronavirus outbreak gained new momentum in June and July. On Tuesday, the Federal Reserve Bank of St. Louis sounded the same alarms, pointing to new data showing the “recent recovery in employment has halted” as a result of the nationwide spike in infections.
President Trump on Tuesday suggested some parts of the economy are snapping back quickly, such as the housing market, and he has also touted the stock market’s robust performance in recent months. Still, 20 million to 30 million Americans remain unemployed, and if companies halt rehiring, it could mean the recovery takes much longer than envisioned a few weeks ago.
The dour news arrived as Democrats and Republicans in Congress continue to battle over the size and scope of the next coronavirus relief package. Lingering disagreements over the future of federal unemployment payments and relief to other cash-strapped workers, renters, businesses and local governments threaten to push negotiations into next week, lawmakers have said.
“I am hoping this will light a fire under Congress,” said Martha Gimbel, senior manager of economic research at Schmidt Futures. “I think there was plenty of data before this that things were really bad, and it is frustrating for me it will take catastrophic economic numbers to move Congress.”
Nearly all of the job gains in July came in service-providing sectors, ADP reported, including education, health, leisure and hospitality, as some states relaxed restrictions in the weeks before coronavirus infections again began to climb. Construction jobs, meanwhile, fell by 8,000. Across all industries, medium-size employers faced the greatest struggle, shedding roughly 25,000 jobs last month despite modest hiring gains by the smallest and largest companies.