Companies hired at a brisk pace in September despite fears about Covid and the economy, ADP says

According to ADP’s Wednesday report, companies reacted positively to the Covid Delta variant of Covid and began hiring in September at a much faster pace than they expected.

Private job growth rose to 568,000 during August, which was more than the Dow Jones estimate of economists at 425,000. It also beat the upwardly revised 340,000 reading from August. In August, the initial report indicated growth of 374,000.

This report is released amid worries about the speed of hiring, considering continuing fears over the Delta spread. There are also signs that the rapid economic growth in 2021 was slowing heading into fall, especially due to supply chain bottlenecks which have driven inflation steeply higher.

Nela Richardson (ADP Chief Economist) stated, “The labor market continues to recover despite a marked slower pace than the 748,000 job pace in the first quarter.”

After the release, stock market futures fell to their lowest point for the day while yields on government bonds rose.

With 226,000 jobs created, the hospitality and leisure sector was the most important. Because it was the most vulnerable to economic recovery, this sector was hardest affected by the pandemic. There are almost 2 million jobs available, but establishments still struggle with labor shortages.

According to Labor Department data, 8.8 million more people are employed in the sector (bars, restaurants, hotels) than they were a year ago. But, their unemployment rate stands at 9.1%, as opposed to the 5.2% national rate.

Many of the hiring seems to have been through larger hotels or chains. With 390,000.0 jobs created by companies with at least 500 workers, this is an impressive feat. Medium-sized companies added 115,000 jobs to the list, and businesses with 50 or fewer workers created just 63,000 new jobs.

Covid cases have been declining at a faster rate than other areas, which is in spite of some regional hotspots. The CDC reported that the total number of U.S. patients rose to 97.909 in a week, compared to 162,284 a month prior.

The services sector dominated with 466,000 new employees. Education and health services had 66,000 and professional and commercial services 61,000 respectively. Utility trade, transport, and utility trade combined with 54,000 each was also a big contributor.

Goods producers saw a strong 102,000 increase. Construction added 49,000, while manufacturing contributed 49,000.

ADP’s report will serve as an indicator for Friday’s Labor Department’s nonfarm payrolls. Economists have estimated that Dow Jones will add 500,000 jobs to the economy after August’s drop of 235,000. The reports may differ in significant ways. Through August, ADP counts of private payrolls were on average 37,000 below the government’s.

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