WASHINGTON: Private businesses hired 571,000 workers last month, payroll services firm ADP reported yesterday, the latest sign that the US economy is bouncing back from the Delta wave of COVID-19. The employment increase was better than analysts had forecast, and saw firms of all sizes add positions, with the bulk of the growth in the services sector, including leisure and hospitality businesses that were badly hit by the pandemic restrictions. "The job market is revving back up as the Delta-wave of the pandemic winds down," said Mark Zandi, chief economist of Moody's Analytics, which collaborates with ADP on the report.
"As long as the pandemic remains contained, more big job gains are likely in coming months." The data is often seen as a preview of the Labor Department's official employment report, which is due out Friday and expected to show the world's largest economy added 400,000 jobs in October more than double the disappointing result in September as the Delta wave snarled businesses. The ADP data showed hiring in goods-producing industries picked up, with 113,000 new positions, the biggest gain in a year and coming as ongoing supply chain snarls have harmed factories.
The dominant services sector added 458,000 positions, 185,000 of which were in the leisure and hospitality sector. ADP's data does not necessarily mean a strong jobs report, but Ian Shepherdson of Pantheon Macroeconomics said, "The second straight overshoot against consensus has our attention." He said he is considering upping his forecast for the official data but noted that ADP "is not always right; at best, it shifts the balance of risks."
Services sector
The vital US services sector saw business surge in October despite continued supply chain issues, pushing an industry index released yesterday to a new all-time high. The Institute for Supply Management (ISM) said its services index jumped to a record 66.7 percent in October-higher than analysts expected-from 61.9 percent the month prior, fueled by big gains in new orders and business activity. Every industry grew last month, but ISM survey chair Anthony Nieves warned that "ongoing challenges-including supply chain disruptions and shortages of labor and materials-are constraining capacity and impacting overall business conditions."
Business activity jumped to almost 70 percent after a 7.5 percentage point gain, while new orders reached nearly the same level after rising more than six points. However, employment dropped slightly to 51.6 percent, but remained above the 50-percent level indicating expansion. Signs of the supply chain snarls that have caused shortages of goods and pushed up prices could be seen in the data. Inventories accelerated their contraction with a nearly four point drop, while prices rose to 82.9 percent and supplier delivery times lengthened.
"In general, we still have very strong business activity throughout our business channels. This is despite a very challenging business environment of increasing costs, a very difficult employee retention and hiring environment and massive logistical backlogs," a wholesale trade company said in the survey. Oren Klachkin of Oxford Economics predicted the services sector-which makes up a huge part of the US economy-would continue to expand into next year, but the supply challenges would not go away until late next year. "Though policy makers and business leaders are working to unclog supply chains, it will take time to return to pre-Covid conditions," he said. - AFP