Employment in the private sector increased by 978,000 jobs last month, payroll giant ADP
Small businesses added 333,000 jobs in May, including 177,000 in businesses with between one and 19 employees, and 156,000 in businesses with 20 to 49 employees. Medium-size businesses with between 50 and 4999 employees gained 338,000 jobs in May, while large businesses added 308,000 jobs, including 88,000 in companies with between 500 and 999 employees, and 220,000 in corporations with 1,000 employees or more.
The service-providing sector gained 850,000 jobs in May, including 68,000 in professional and business services such as accounting and tax preparation, and 20,000 jobs in financial activities such as banking. The goods-producing sector gained 128,000 jobs, including 65,000 in construction and 52,000 in manufacturing. Franchises added 57,700 jobs.
The jobs report represents a big improvement from recent months and the strongest gains since the early days of the recovery, according to the chief economist at ADP, Nela Richardson. She pointed out that job gains averaged nearly 400,000 in the first four months of the year. Despite the 978,000 jobs gained in May, the private sector still faces a deficit of 7 million jobs compared to pre-pandemic levels. The 850,000 jobs added in the service sector far outpaced the 263,000 averaged over the past six months, she noted.
“It’s those consumer-facing providers that have been the most sensitive to the virus concerns, and as we’ve said all along, that leaves them with the most to gain as the pandemic slowly subsides,” said Richardson during a press conference Thursday.
While the labor market as a whole continues to improve, a growing number of companies have reported challenges in finding qualified workers. “The constraints we’re seeing for hiring are not due to economic sluggishness,” said Richardson. “Quite the contrary. It’s labor supply issues and pandemic-related health and family concerns, including childcare issues, that are holding back even stronger job gains.”
More than 20 states reacted to April’s disappointing jobs report from the U.S. Bureau of Labor Statistics by opting to end enhanced unemployment insurance benefits, blaming the extra $300 payments for encouraging workers to stay on the sidelines and not take the available jobs. However, the generous unemployment benefits are not the only reason why workers haven’t been taking the jobs, Richardson noted.
“Over the summer, the nation will be able to assess whether the current generosity of the UI benefits were a prime factor in keeping workers out of the workforce,” she said. “My take is that UI is just one of a complex of post-pandemic factors, yet all of these factors should prove temporary as vaccines become available to larger proportions of the population and uptake continues to increase and as especially as schools continue to reopen more fully and virus concerns will abate.”
The Labor Department reported Thursday that jobless claims have fallen below 400,000. “That’s the lowest level since the pandemic began,” said Richardson. “Another positive is job openings, which have hit a historic high, and that will allow the job market to more swiftly recover as supply constraints abate.”
