Private job growth data released on Wednesday added to rising confidence that the economy is returning in full force after the pandemic. Private companies posted over 1 million jobs and hired 978,000 employees, it is a signal that the market is reopening as more and more people are vaccinated.
ADP Data: Key Points
- Private payroll increased by 978,000 in May than 680,000 expected
- It is the largest growth since June 2020 as the economy is emerging from the early covid-19 lockdown
- Despite the biggest loss, the Leisure and Hospitality industry showed the biggest growth with 440,000 new hires
The sudden job gain was dominated mainly by the services sector, which posted 850,000 openings, with increments occurring evenly among businesses of all sizes. According to ADP Research Institute Data, company payroll increased by 742,000 during the month after a dramatic gain of 565,000 in March. “U.S. companies hired 970,000 employees in May, the biggest gain since June 2020”, the same report explained.
Mark Hamrick, a senior economic analyst, said the rapid increase in vaccination will bring more widespread reopenings and hirings. “Vaccination will boost the labor supply, as most people protect themselves and their families against the health risks of covid-19,” he added. Vaccination is also cited to increase labor demand in the food industry, making it safe for diners to enjoy in-person services.
All industries did but one industry, specifically, saw the biggest payroll improvements, according to ADP Data, which shows firms hiring 26 million employees in the USA. The biggest gains were led by the leisure and hospitality industry, where jobs increased by 237,000, the biggest gain since the pandemic began. Trade and transportation payrolls, particularly logistics, ramped up by 155,000 in the month of May.
Education and health services also posted 139,000 jobs, though most came from the healthcare industry. Meanwhile, professional and business services also hired 68,000 new employees. The job gains in the leisure and hospitality sector are significant since the industry shed nearly four million people or 25% of its workforce. As of January 2021, 15.9% of the industry’s workers remained unemployed but this growth has signaled some positivity.
“Now, when people are returning to their job and have options to choose where to work, they’re asking questions that they wouldn’t have asked in the past, such as, is there any unforgiving WFH involved? Or If they could work in shifts. Expectations have always been a part of the workers and they’ve been dramatically changed.” For good reasons, ADP’s methodology doesn’t count the people returning to their previous employers, showing the industries are returning at their full pace.