U.S. private-sector businesses added 167,000 workers to payrolls in July as rising coronavirus cases across much of the country slowed the pace of the labor market recovery, according to the ADP National Employment Report released Wednesday.
The report — compiled by payroll and benefits processor ADP and Moody’s Analytics — found a smaller rise in nonfarm private sector employment after a 2.4 million increase in June.
Released two days ahead of the federal government’s monthly jobs report, the ADP report comes amid concern over whether the U.S. was able to extend two months of job gains through July.
The U.S. gained back roughly 8 million of the 21 million jobs lost to the first wave of the pandemic in May and June. But a large surge in coronavirus cases in July slowed the pace of expansion and has threatened the job gains made since the depths of the crisis in March and April.
“Job growth slowed sharply in July,” said Mark Zandi, chief economist at Moody’s Analytics, in a call with reporters Wednesday. “With the small July gain, private sector employment is still 13 million jobs or about 10 percent below its pre-pandemic February peak.”
Small firms, those with between 1 and 49 employees, reported a gain of 63,000 jobs in July, according to ADP and Moody’s, and large businesses with at least 500 employees gained 129,000 new workers. But middle-sized businesses with 50 to 499 employees reported a loss of 25,000 workers from payrolls in July.
Zandi pinned the slowdown on the steady spread of the novel coronavirus throughout the South and Sun Belt since mid-June. He singled out the reimposition of business closures in California, Florida and Texas last month as particularly damaging for the job market recovery.
“Those three states combined accounted for almost a third of the nation’s employment so reversals there had a big impact on the labor market,” Zandi said. He added that every increase of 1,000 confirmed coronavirus infections per 1 million residents raises the national unemployment rate by roughly 1 percentage point.
Zandi also attributed the slowdown to the depletion of federal economic rescue aid enacted by the CARES Act in late March, including the Paycheck Protection Program (PPP).
“Many of the businesses who took that money early in the pandemic now largely spent it. And given the pullback on the reopenings and for parts of the country, they don’t have the resources to continue paying their employees,” he said.
–Updated at 9:38 a.m.