US Firms Add 1 Million Leisure And Hospitality Jobs In 3 Months

Private sector employers added 692,000 jobs in June, ADP said Wednesday.

That was considerably more than expected (the market was looking for 600,000), but the range made the consensus all but meaningless. Nearly three-dozen economists forecast gains of anywhere from 388,000 to 1.25 million.

Notably, May’s blockbuster was revised lower by 92,000 (figure below). That took some of the shine off the headline beat for June.

Hiring was evenly distributed across firm sizes, with small businesses adding 215,000 positions, midsized 236,000 and large employers 240,000.

“The labor market recovery remains robust, with June closing out a strong second quarter of jobs growth,” ADP chief economist Nela Richardson said.

Gains were, of course, concentrated in the services sector, where employers added 624,000 jobs (figure below).

ADP has been a poor predictor of NFP in the COVID era, so it wouldn’t be prudent to extrapolate too much.

June’s 332,000 addition brought the three-month change in leisure and hospitality hiring to almost 1 million (red-shaded area in the figure, below).

Those are the jobs that need to come back. They’re also the jobs where labor market frictions are particularly acute. High-contact businesses will likely continue to struggle to fill open positions for a laundry list of reasons, including demands for better pay, benefits and the proliferation of the “Delta” COVID variant in the US.

“While payrolls are still nearly 7 million short of pre-COVID-19 levels, job gains have totaled about 3 million since the beginning of 2021,” ADP’s Richardson went on to say Wednesday, adding that “service providers, the hardest hit sector, continue to do the heavy lifting, with leisure and hospitality posting the strongest gain as businesses begin to reopen to full capacity across the country.”

There was nothing in the ADP report that altered expectations ahead of Friday’s NFP print.


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4 thoughts on “US Firms Add 1 Million Leisure And Hospitality Jobs In 3 Months

  1. I was very surprised to learn that the ADP figures are NOT actual numbers. Rather, they are extrapolated from their customer data, or something like that. That may help explain some of the variance between between the ADP & BLS figures.

    Re: the impact of the Delta variant. Last week I saw an article about the Whitehouse response to it. Apparently they ruled out re-imposing mask and social distancing mandates because …. well, most of the new infections are in Trump country where such mandates will simply not be accepted. They hope to encourage Trumpers to get vaccinated. (That part is Onion-worthy.)

    Meanwhile, as Q2 comes to an end, where’s that “herd immunity” the geniuses on Wall Street assured us would be in place by now? In Vermont & Maine, perhaps, but not in Florida and Texas and Missouri and etc.

    1. The ADP methodology is here: It looks like ADP uses their customer payroll headcount,to estimate the economy-wide employment change. It would be interesting if ADP would report its raw customer payroll data as well, but it might not want to reveal that much about its own metrics?

      I don’t think a renewed federal mask/distancing mandate makes sense, as the states that need it will simply devote their energy to defying/litigating. I’d rather see federal assistance for vaccination efforts in the communities that are receptive.

  2. Herd immunity probably reached for Democrats. Losing 5% of Republicans will not likely swing races in those States, so no never mind.

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