A Panda Express restaurant displays a “Now Hiring” sign in Tampa, Florida, June 1, 2021.
Octavio Jones | Reuters

U.S. companies created far fewer jobs than expected in August as the Covid resurgence coincided with cutbacks in hiring, according to a report Wednesday from payroll services firm ADP.

Private payrolls rose just 374,000 for the month, well below the Dow Jones estimate of 600,000 though above July’s 326,000, which was revised downward slightly from initial 330,000 reading.

Most of the new jobs came from leisure and hospitality, which added 201,000 positions in a somewhat hopeful sign that an industry beset by a labor shortage continues to recover.

Education and health services combined to add 59,000 for the month as hospitals in some parts of the country were swamped with virus cases and schools begin to reopen.

“The delta variant of COVID-19 appears to have dented the job market recovery,” said Mark Zandi, chief economist at Moody’s Analytics, which works with ADP on the report. “Job growth remains strong, but well off the pace of recent months. Job growth remains inextricably tied to the path of the pandemic.”

The apparent letdown comes at a pivotal time.

Following a robust recovery from the shortest but steepest recession in U.S. history, economic data of late has been disappointing, possibly reflecting pullbacks from this summer’s surge of the Covid delta variant. The U.S. has been averaging about 150,000 new cases a day following a burst in July and August.

Markets are awaiting Friday’s nonfarm payrolls report, which is expected to show 720,000 new jobs added and an unemployment rate falling to 5.2%, according to Dow Jones estimates.

Wall Street initially shrugged off the ADP report, with stock market futures still pointing to a higher open. However, major averages were mixed in late-morning trade and government bond yields were little changed.

Differences between job counts

The ADP numbers could be pointing to a softer Labor Department report, though the firm’s count has been an unreliable indicator in 2021.

ADP’s tally averaged a growth of 495,000 jobs per month through July; the Labor report showed an average increase of 617,000 during that period. The two reports also diverged sharply in July, with the official count at 943,000 compared with ADP’s 326,000.

Goldman Sachs said the ADP report “suggests potential downside” for Friday’s Bureau of Labor Statistics number. Goldman already is forecasting below-consensus payroll growth of 600,000.

According to ADP, the weakest job growth for August came in small businesses, which added just 86,000 positions. Companies with 50 to 499 employees led with 149,000, while big business contributed 138,000.

Elsewhere at the sector level, services accounted for 329,000 of the total, with professional and business services growing by 19,000 and trade, transportation and utilities adding 18,000.

Of the 45,000 goods-producing jobs, 30,000 came from construction, 9,000 from natural resources and mining and 6,000 from manufacturing.

Federal Reserve officials are watching the jobs numbers carefully.

Recent statements out of the central bank indicate that it likely will slow the pace of its monthly purchases of bonds so long as job growth continues apace. Officials have been largely optimistic about the employment picture, though they note that about 6 million fewer workers are holding jobs now than before the pandemic.

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Elizabeth Holmes, founder and former CEO of Theranos, arrives for motion hearing on Monday, November 4, 2019, at the US District Court House in San Jose, California.
Enlarge / Elizabeth Holmes, founder and former CEO of Theranos, arrives for motion hearing on Monday, November 4, 2019, at the US District Court House in San Jose, California.
Getty | Yichuan Cao

Nearly a decade ago, Theranos touted a revolutionary diagnostic device that could run myriad medical tests without having to draw blood through a needle. Today, the startup’s founder, Elizabeth Holmes, goes to court, where she’s facing 12 criminal counts for statements she made to investors and consumers about her company’s technology.

Holmes founded Theranos in 2003 after dropping out of Stanford University at the age of 19. Driven by her phobia of needles, Holmes wanted to create diagnostic tests that use blood from finger pricks rather than from needles. The idea caught on, attracting well-connected board members like Henry Kissinger and James Mattis, drawing over $400 million in investments from wealthy investors including Larry Ellison and Rupert Murdoch, and securing lucrative partnerships with Walgreens and Safeway. At its peak, Theranos was worth over $9 billion.

But Theranos’ myth started unwinding in 2015 when a Wall Street Journal investigation revealed that the company had been performing most of its tests on traditional blood diagnostic machines rather than its own “Einstein” device. The company’s own employees doubted the machine’s accuracy.

Problematic claims

For many tests, blood from finger pricks is difficult to analyze. Small amounts of blood typically contain more variability than larger draws from veins, and a poorly executed stick might grab interstitial fluid along with the blood. Plus, finger-prick blood comes in contact with the skin, raising the chances of contamination that can confound the results. Yet Holmes and Ramesh “Sunny” Balwani, Theranos’ president and chief operating officer, painted a rosy picture for investors, partners, and customers.

“Theranos claimed that its laboratory infrastructure yielded test results in less time than conventional labs—requiring hours instead of days. Theranos claimed that its proprietary technology and methods would minimize the risk of human error and generate results with the highest accuracy,” the indictment says. Despite this, prosecutors have said, “Holmes and Balwani knew that the analyzer had accuracy and reliability problems, performed a limited number of tests, was slower than some competing devices, and, in some respects, could not compete with existing, more conventional machines.”

Holmes and Balwani were indicted in June 2018, and soon Theranos was facing mounting civil and criminal investigations. The company settled a Securities and Exchange Commission probe and shut down shortly thereafter.

The end of Theranos didn’t halt the scrutiny of Holmes’ and Balwani’s behavior, though. Three rounds of indictments have brought the total to 10 counts of wire fraud and two counts of conspiracy to commit wire fraud. The latest indictment, which supersedes the previous two, was filed in June 2020.

Both Holmes and Balwani have pleaded not guilty, and Balwani’s trial will begin next year.

The indictments aren’t limited to claims about the company’s proprietary diagnostic machine but also include what Holmes and Balwani allegedly said to investors about revenue and business deals. The prosecution says the pair told investors that Theranos would bring in over $100 million in revenue in 2014, helping the company break even, and hit $1 billion in 2015, amounts that exceeded the executives’ actual expectations. Prosecutors also say that the pair falsely told investors that the company landed contracts with the Pentagon.

Delayed trial

The road to trial has been filled with delays, first due to the COVID-19 pandemic and then again when Holmes became pregnant. Her child was born in July, around the time the trial was supposed to begin. If convicted, Holmes faces up to 20 years in prison.

Today’s proceedings kick off jury selection, in which prosecutors and defense attorneys will begin questioning over 100 potential jurors. The pool was already slashed last week, as Holmes’ attorney Kevin Downey told US District Judge Edward Davila of the Northern District of California that more than 30 jurors had “consumed substantial—and I mean lengthy, extrajudicial—material about the case and about the defendant.” In a pre-trial hearing, Downey also said that selected jurors must be vaccinated, while the prosecution wouldn’t commit to a stance on the issue.

Opening statements are scheduled to begin on September 8, and the trial may run through mid-December. Holmes is expected to claim that Balwani, who was her boyfriend for much of Theranos’ existence, was an abusive and controlling partner. A court filing released on Saturday revealed that Holmes is expected to take the stand during the trial and allege that he monitored her calls, texts, and emails and was physically violent, claims that Balwani denies. Her attorneys say these actions affected her “state of mind” when the alleged fraud took place.

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Satya Nadella, chief executive officer of Microsoft Corp., speaks during the Windows 10 Devices event in New York on Oct. 6, 2015. Microsoft Corp. introduced its first-ever laptop, three Lumia phones and a Surface Pro 4 tablet, the first indication of the company’s revamped hardware strategy three months after saying it would scale back plans to make its own smartphones.
John Taggart | Bloomberg | Getty Images

Microsoft said Tuesday it will start offering free upgrades to Windows 11, the next version of its desktop operating system, to eligible PCs on Oct. 5.

Windows, originally released in 1985, remains a key piece of Microsoft’s business. In its fiscal fourth quarter, Windows delivered $6.6 billion in revenue, representing 14% of the software and hardware company’s total sales. A successful release of Windows 11 could further secure the franchise’s future, which can also benefit other parts of Microsoft’s business, such as Azure and Office.

As it has for past updates, Microsoft will use on-device data and other factors to determine which devices will get the offer to upgrade first, Windows marketing general manager Aaron Woodman wrote in a blog post.

On PCs running Windows 10 that have the necessary components to run Windows 11, the Windows Update feature will notify people when the upgrade is available. People can also go to “Settings > System > Windows Update” in their computers to manually check if the upgrade is ready.

Woodman pointed to a variety of Windows 10 PCs that people can buy now and upgrade to Windows 11 later, including Dell’s XPS 13, the HP Spectre x360 and Lenovo Yoga Slim 7i Pro, as well as Microsoft’s own Surface Pro 7.

Windows 11 brings a modern look, with rounded corners and app icons displayed in the center of the taskbar. New sounds are designed to be less jarring. Microsoft redesigned the Start menu, the app store and the Settings app, and it’s easier to arrange multiple app windows on screen. And Android apps will be available, by way of Amazon’s Appstore. The refresh comes as Microsoft faces rising competition from Chromebooks running Google’s Chrome OS, and Chromebooks are capable of running Android apps.

There’s also no guarantee everyone will want to upgrade to the new OS given its predecessor’s massive popularity. Microsoft released Windows 10 in 2015, making this the longest time period a version of Windows has been in market before a replacement. It has become the world’s most popular PC operating system, boasting 1.3 billion monthly active devices. Microsoft will continue to support Windows 10 through 2025, and the company suggests people stick with it if their PCs can’t run Windows 11 and they don’t want to buy a new PC.

On June 24, Microsoft announced Windows 11 as the successor to Windows 10 and made it available to testers enrolled in the Windows Insider program four days later. Since then, Microsoft has rolled out seven incremental updates containing feature changes and bug fixes. Now the company is preparing to make a final version Windows 11 available to many more customers and have device makers start selling new PCs that run the operating system.

Microsoft said last week it will support Windows 11 when it’s running on a variety of PC processors, including Intel chips manufactured as far back as 2016. The company expects all devices that meet the Windows 11 requirements to receive the free upgrade by the middle of 2022, Woodman wrote.

WATCH: How Microsoft is creating a new ‘cloud PC category’ with Windows 365

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A pending sale sign in front of a home in Miami.
Getty Images

Signed contracts to purchase previously owned homes fell 1.8% in July from June, according to the National Association of Realtors.

Sky-high home prices have caused affordability to drop dramatically in the last several months. The median price of an existing home was up 18% in July, according to the Realtors. Much of that was due to the fact that there was far more activity on the higher end of the market, which skewed that median higher.

Pending sales are a forward-looking indicator of sales that close in one to two months.

“The market may be starting to cool slightly, but at the moment there is not enough supply to match the demand from would-be buyers,” Realtors chief economist Lawrence Yun said in a release. “That said, inventory is slowly increasing and home shoppers should begin to see more options in the coming months.”

Mortgage rates fell sharply during July, with the average on the popular 30-year fixed starting the month at 3.18% and ending at 2.84%, according to Mortgage News Daily. That drop gave buyers more purchasing power, which likely helped those on the edge of affording today’s high home prices. The lower rates, however, were not enough to really juice the market.

Pending sales were down 8.5% compared with July last year. That annual comparison, though, is an unusual one, because sales spiked so dramatically last summer after the initial shutdown due to the pandemic.

Regionally, the Realtors’ pending sales index fell 6.6% in Northeast month to month and was down 16.9% year over year. In the Midwest it dropped 3.3% for the month and 8.5% from July 2020.

In the South, sales fell 0.9% for the month and were down 6.7% annually. In the West, sales rose 1.9% monthly and were down 5.7% annually.

“Homes listed for sale are still garnering great interest, but the multiple, frenzied offers — sometimes double-digit bids on one property — have dissipated in most regions,” Yun said.

Total housing inventory at the end of July was 1.32 million units, up 7.3% from June’s supply and down 12% from one year earlier (1.5 million). There was a 2.6-month supply of unsold inventory at the July sales pace

Closed sales of existing homes in July, which represent contracts signed in May and June, rose for the second straight month.

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