US companies added far fewer jobs than expected in August, with the private sector hiring just 374,000 workers for the month, according to a disappointing report published Wednesday by payroll processing firm ADP.
The gain was well below the 600,000 new jobs that were expected to be added by economists surveyed by Dow Jones and slightly above the 326,000 jobs added in July, according to the revised figures released Wednesday.
“The Delta variant of COVID-19 appears to have dented the job market recovery. Job growth remains strong, but well off the pace of recent months,” Mark Zandi, chief economist of Moody’s Analytics, said in a statement.
“Job growth remains inextricably tied to the path of the pandemic,” he added.
Encouragingly, the leisure and hospitality sector — the industry hardest hit by the pandemic and subsequent government restrictions — saw the most jobs added this month.
The sector added 201,000 new jobs in August, ADP reported, more than the 139,000 jobs the sector added in the month prior.
“Service providers continue to lead growth, although the Delta variant creates uncertainty for this sector,” Nela Richardson, ADP’s chief economist, said in a statement.
The education and health services sector added 59,000 jobs, with most coming from health care as hospitals were hit by a rush of COVID-19 patients amid surging cases and hospitalizations caused by the Delta variant.
Trade, transportation and utilities combined picked up 18,000 new jobs while the business services sector added 19,000, ADP reported.
And small businesses struggled the most to add new workers, picking up just 86,000 new workers, the report noted.
The ADP data comes as investors digest a recent bout of weaker-than-expected economic data.
Retail sales fell 1.1 percent in July — more than expected — as American shoppers pulled back on spending amid flaring inflation and surging COVID-19 cases.
And new jobless claims edged higher last week in a sign that companies may be slowing down on hiring to see what the pandemic does to business.
ADP’s report comes ahead of Friday’s nonfarm payrolls report, which is expected to show 720,000 new jobs added and a drop in the unemployment rate to 5.2 percent, according to Dow Jones estimates.
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