Private Payroll Growth Falls Short as U.S. Businesses Add 44,000 Jobs in July

Private employers added fewer jobs than economists projected in July, while faster wage growth for job-switchers suggested some industries may still be struggling to find available workers.

By yourNEWS Media Newsroom

U.S. private-sector hiring slowed more than expected in July, with businesses adding 44,000 jobs as several major industries reduced payrolls, according to data released Wednesday by ADP Research.

Economists had forecast a gain of 65,000 positions. ADP also revised its estimate for June slightly lower, reducing the previously reported increase of 98,000 jobs to 95,000.

Although the July total came in below expectations, the report indicated that weaker payroll growth may not necessarily reflect declining demand for employees. A limited supply of available workers could also be restraining hiring, particularly in parts of the economy where employers continue competing for labor.

Wage gains for employees who changed jobs accelerated to their strongest pace in nearly a year. That increase suggested businesses may be paying more to attract workers when the pool of qualified candidates is constrained.

“Job-changers are highly sensitive to real-time economic conditions, and their rapid pay growth implies supply constraints in parts of the labor market. Typical hiring patterns, meanwhile, are changing as employers react to shifting macro-economic conditions,” ADP economist Nela Richardson said in a statement.

The number of new jobs required each month to prevent the unemployment rate from rising has also declined substantially, according to recent estimates. Stricter immigration enforcement and deportations have slowed growth in the available labor force, reducing what economists describe as the break-even pace of job creation.

Some estimates place that threshold as low as zero, meaning the economy may not need to add a significant number of jobs to keep unemployment steady if the labor force is no longer expanding at its previous rate.

Employment results varied considerably across industries in July.

Mining and natural resources companies eliminated 6,000 positions, a decline that may be connected to lower oil and gasoline prices. Construction payrolls increased by 1,000 jobs, while manufacturers added 2,000 workers.

The leisure and hospitality sector posted one of the report’s more unexpected declines, shedding 11,000 jobs during the month. The reduction may reflect employers reversing hiring connected to the World Cup in July.

Trade, transportation and utilities businesses also reduced payrolls. Every other service-sector category tracked by ADP recorded employment growth.

The report presented a labor market in which overall hiring remained subdued even as wage pressure among job-switchers pointed to continued competition for workers in certain sectors. The combination of slower labor-force growth, shifting immigration policy and uneven industry demand may also be changing how monthly payroll figures correspond with unemployment.