ROSELAND, N.J. - The U.S. private sector saw an increase of 122,000 jobs in July, while annual pay rose by 4.8 percent compared to last year, according to the ADP National Employment Report. This report, produced by the ADP Research Institute in collaboration with the Stanford Digital Economy Lab, draws on actual, anonymized payroll data from over 25 million U.S. employees.
July's job growth was marked by a notable rise in goods-producing jobs, adding 37,000 positions, led by construction with 39,000 new jobs. However, manufacturing saw a decrease, shedding 4,000 jobs. The service-providing sector contributed 85,000 jobs, with significant gains in trade/transportation/utilities and leisure/hospitality, which added 61,000 and 24,000 jobs, respectively.
Regional data showed that the South led with 55,000 new jobs, followed by the West with 32,000, the Northeast with 21,000, and the Midwest with 17,000. In terms of business size, medium-sized establishments (50-499 employees) accounted for the majority of the growth, adding 70,000 jobs. Large establishments (500+ employees) followed with 62,000 jobs, while small establishments (1-49 employees) experienced a decline, losing 7,000 jobs overall.
The report also highlighted a slowdown in pay gains for both job-stayers and job-changers. Job-stayers saw their annual pay increase by 4.8 percent, the slowest pace in three years, while job-changers experienced a decrease in pay gains to 7.2 percent from 7.7 percent.
Nela Richardson, Chief Economist at ADP, commented on the findings, "With wage growth abating, the labor market is playing along with the Federal Reserve's effort to slow inflation. If inflation goes back up, it won't be because of labor."
The June figures were also revised, showing an increase from the previously reported 150,000 to 155,000 jobs added.
This analysis is based on a press release statement from ADP, Inc.
In other recent news, Automatic Data Processing (NASDAQ:ADP) has been attracting attention due to its robust financial performance in the third quarter of fiscal 2024. The company reported a 7% increase in revenue and a 14% growth in adjusted diluted earnings per share (EPS). This strong performance has led ADP to revise its full-year outlook, expecting higher Employer Services (ES) retention and margin, and increased client funds interest revenue due to rising interest rates.
RBC Capital maintained a Sector Perform rating on ADP, forecasting revenue growth between 4.5% and 5.5% for fiscal year 2025, alongside 7% to 9% growth in earnings per share (EPS). The firm also expects ADP to achieve an EBIT margin expansion of 20 to 40 basis points, despite an anticipated slowdown in employment and small business formation.
On the other hand, TD Cowen held its rating on ADP shares, albeit with a slight reduction in the stock price target from $253 to $251. This adjustment was influenced by an increase in float revenue for ADP, balanced by a reduced expectation for margin expansion in the future.
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