WASHINGTON (Reuters) – U.S. private payrolls rose more than expected in July as small businesses boosted hiring, pointing to continued labor market resilience that could shield the economy from a recession.
Wage Growth Moderates
The ADP National Employment report on Wednesday also showed a moderation in wage growth, which bodes well for the inflation outlook. This aligns with recent upbeat data, raising hopes for a “soft landing” economy envisioned by Federal Reserve officials.
Private Payrolls Surge
Private payrolls increased by 324,000 jobs last month, outperforming economists’ expectations of 189,000. Hiring at small businesses, establishments with one to 49 employees, accounted for over two-thirds of the gain in private payrolls. Medium-sized businesses with 50-499 workers rose by 138,000 jobs, while large establishments with more than 500 employees shed 67,000 positions.
Industry Composition and Labor Market
The services sector dominated employment gains with 303,000 new jobs, especially in leisure and hospitality, still recovering from difficulties finding workers during the COVID-19 pandemic. The goods-producing sector added 21,000 jobs, but manufacturing lost 36,000 positions. Despite interest rate increases from the Fed, the labor market is gradually slowing.
Positive Economic Outlook
The labor market’s resilience and positive economic outlook continue as consumers remain optimistic about job opportunities. The upcoming U.S. Bureau of Labor Statistics’ employment report for July is anticipated to show further gains in both private and government employment.
The U.S. labor market remains robust, fueled by strong hiring in small businesses. Moderating wage growth and positive economic indicators offer hope for a stable economic outlook. The Federal Reserve’s cautious approach to rate hikes reflects confidence in achieving a “soft landing” scenario.