Economy May Avoid Summer Slowdown; Staffing Sector Adds Jobs

Jul 3, 2013

ADP’s National Employment Report this morning that 188,000 new private sector ADP sector changes June 2013jobs were created last month is giving rise to hopes the summer slowdown that has so bedeviled the U.S. economy the last several years may not return this year.

That would be good news indeed, since the last three summers have seen job growth numbers plummet. Two years ago, job growth averaged 184,000 monthly for March, April and May. For the summer months of June, July and August, the average was 88,000. Last year was better; the summer decline was only 12,000 jobs.

Now, though, with ADP’s growth estimate coming in above the 160,000 economists were expecting, the evidence is, “The (jobs) market is holding firm,” said Moody Analytics’ Chief Economist Mark Zandi. Moody’s prepares the ADP jobs report, based on payroll information provided by the company.

The ADP National Employment Report showed that the job increases were spread among all major sectors. One of the strongest gainers was the professional/business services sector, which added 40,000 jobs. Staffing firms and PEOs are included here, suggesting the temp hiring that has fueled a significant part of the monthly job gains probably continued strong in June.

Overall, the service sector grew by 161,000 jobs, its largest gain since February. Encouragingly, the “goods-producing” sector, which in the May ADP showed a job loss, added 27,000 new workers in June.

Small employers, those with fewer than 50 workers, did the lion’s share of hiring, creating 84,000 new jobs. But unlike in some previous months, mid-to-large employers also added substantial new workers. The largest employers, those with more than 1,000 workers, added 37,000 new jobs in June.

Economists are now eying Friday’s official government report with greater optimism. Several surveys put the number of net new jobs they expect at about 165,000. TrimTabs Investment Research, which does its own analysis, estimates employment grew by 182,000 jobs in June.

The U.S. Labor Department report is also expected to show a slight decline in May’s unemployment rate from 7.6% to 7.5%.

SHRM’s LINE report for July, predicts that hiring for both manufacturing and service providers will remain positive, though manufacturing hiring will be slight. Nonetheless, SHRM’s Leading Indicators of National Employment says the July hiring rate for both areas will be at a three year high.

Manufacturers will find it somewhat easier to fill openings in July, according to the report. Recruiters in the service sector will find their job considerably harder — 10% more difficult — than they did a year ago.

The LINE reports notes that “A March 2013 SHRM survey showed that two-thirds (66 percent) of  organizations that were hiring reported having a difficult time recruiting, up from 52 percent in 2011.”