Companies hired almost a million new workers in May, ADP says

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Private-sector hiring picked up at its fastest pace in almost a year last month as companies hired almost 980,000 workers, according to a report published Thursday by payroll processing firm ADP.

That’s a leap from the 654,000 workers added on private payrolls in April and marks the country’s largest gain since June.

ADP’s private payroll figures could bode well for the closely watched May employment report, which is slated to be published Friday morning. But the two reports occasionally differ, like in April when the government count reported just 266,000 new jobs, far short of expectations of a million.

“Private payrolls showed a marked improvement from recent months and the strongest gain since the early days of the recovery,” Nela Richardson, ADP’s chief economist, said in a statement. “Companies of all sizes experienced an uptick in job growth, reflecting the improving nature of the pandemic and economy.”

The leisure and hospitality sector, the industry hardest hit by the pandemic and subsequent government restrictions, saw the most jobs added in a sign of a continued recovery. The sector added 440,000 new jobs in May, ADP reported.

The education and health services sector added 139,000 jobs, with most coming from health care. Trade, transportation and utilities picked up 118,000 new workers. Professional and business services added 68,000 new hires.

Construction added 65,000 new workers while manufacturing saw gains of 52,000 for the month.

For Friday’s employment report, economists surveyed by Dow Jones are expecting to see growth of 671,000 jobs added in May, and a drop in the unemployment rate to 5.9 percent.

The positive ADP data came as the Labor Department released figures that showed new jobless claims fell below 400,000 for the first time since the start of the pandemic.

While the labor market still has a ways to go before it hits pre-pandemic levels, the latest round of data paints a strengthening picture of recovery, Mark Hamrick, senior economic analyst at Bankrate, said.

He added that the question going forward will be how long the current spike in prices will last.

“The multi trillion-dollar question is the future fate of inflation,” he said. “The status of wage gains will be something to watch in the coming months as the Federal Reserve prepares to signal that it will eventually dial back on asset purchases as a prelude to a hike in interest rates, the timing of which remains uncertain.”

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