June ADP National Employment Report Tops Forecast, But Numbers Concern

The June ADP National Employment Report released on Thursday finds private sector employment increased by 172,000 jobs from May to June.

“Since the start of 2016, average monthly job creation has slightly dropped,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “Lackluster global growth, low commodity prices, and an unfavorable exchange rate continue to weigh on U.S. companies, especially larger companies.”

Still, sectors that produce higher-paying jobs continued to lose employment this month, a roughly 7-year trend making wage growth next to impossible. Goods-producing employment was down by 36,000 jobs in June after an additional loss of 5,000 jobs in May. The construction industry lost 5,000 jobs, offsetting May’s gain of 9,000 jobs. Meanwhile, manufacturing lost 21,000 jobs after losing 3,000 the previous month.

But many so-called “mainstream” economists continue to blame non-fundamental influences, this month scapegoating Brexit. The British people voted to leave the European Union (EU) in order to preserve their national and economic sovereignty.

“Job growth revived last month from its spring slump. Job growth remains healthy except in the energy and trade-sensitive manufacturing sectors. Large multinationals are struggling a bit, and Brexit won’t help, but small- and mid-sized companies continue to add strongly to payrolls.”

Payrolls for businesses with 49 or fewer employees increased by 95,000 jobs in June, up from 84,000 in May. Employment at companies with 50-499 employees increased by 52,000 jobs, down from last month’s 60,000. Employment at large companies – those with 500 or more employees – increased by 25,000, up from May’s 23,000. Companies with 500-999 employees added 21,000 and companies with more than 1,000 employees added 4,000 this month.

Ultimately, lower-paying and even part-time opportunities have largely driven job gains. Service-providing employment rose by 208,000 jobs in June, a stronger increase when compared to May’s 173,000 jobs. The ADP National Employment Report indicates that professional/business services contributed 51,000 jobs, up from May’s 47,000. Trade/transportation/utilities grew by 55,000, nearly twice that of the 27,000 jobs added the previous month. Financial activities added 2,000, down from last month’s gain of 13,000 jobs.