July 31, 2019 Reading Time: 2 minutes

The U.S. economy is estimated to have added 156,000 new private sector jobs in July, according to the ADP Research Institute (see chart). That addition puts the 12-month average at 182,574. The ADP Research Institute estimates track the Bureau of Labor Statistics labor-market data fairly well when looking at the 12-month average.

The ADP report shows small businesses (under 50 employees) added 11,000 jobs in July while medium-size business (50–499 employees) added 67,000 new employees and large firms (500 employees and above) added 78,000 new employees. Among the sector breakdowns, goods-producing industries added 9,000 as a 15,000 increase in construction jobs and a 1,000 increase in manufacturing jobs was partially offset by a loss of 6,000 jobs in natural resource and mining industries. Service-providing industries, which typically account for the majority of employment, added 146,000 jobs. Leading the gains were professional and business services (+44,000), health care (+35,000), trade, transportation, and utilities (+27,000), and leisure and hospitality (+26,000).

The report notes that while the labor market remains relatively strong, there has been a mild slowdown in job creation over the past few months. The 12-month average has fallen to around 180,000 from the 210,000–220,000 range it was in as recently as April. The slowdown may reflect normal ebbs and flows in hiring activity, difficulty in finding qualified employees, or emerging caution by employers given the heightened uncertainty regarding trade policy, escalating tariffs, and monetary policy, or perhaps all three.

The employment report from the Bureau of Labor Statistics is due out on Friday, August 2, and should provide a more comprehensive look at the labor market. Both the ADP and BLS reports are subject to revisions in the future.

Overall, the labor market remains solid, with continued jobs gains, a low unemployment rate, low initial claims for unemployment insurance, and positive consumer sentiment. Continued jobs gains also suggest that the broader economy likely continued to expand in July, making the current expansion the longest on record at 121 months. While uncertainty over trade and monetary policy remain, the most likely path is for continued expansion.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals.

Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

Get notified of new articles from Robert Hughes and AIER.