US private jobs creation slows as hiring bottlenecks persist

More evidence surfaced on Wednesday that hiring bottlenecks are weighing on the labour market recovery in the United States.

Payroll processor ADP said on Wednesday that private employers in the US added only 330,000 jobs in July. That number was far short of expectations and marked a sharp slowdown from June’s revised reading of 680,000 jobs created by private firms.

July also marked the slowest pace of jobs creation since February.

“July payroll data reports a marked slowdown from the second quarter pace in jobs growth,” said Nela Richardson, chief economist at ADP, in a press release. “Bottlenecks in hiring continue to hold back stronger gains, particularly in light of new COVID-19 concerns tied to viral variants.”

The disappointing ADP report could temper expectations for Friday’s more comprehensive monthly jobs report from the US Department of Labor.

Businesses around the nation have been struggling to fill a record number of job openings as consumers unleash pent-up demand in the wake of increasing coronavirus vaccination rates.

But as firms gear up operations en masse, bottlenecks are forming in supply chains for raw materials and labour.

Many businesses have offered to increase pay or offer signing bonuses to lure the unemployed back into the labour force.

The mismatch between job openings in the US and millions of unemployed workers has become fodder for the nation’s political gristmill.  In May, the country had a record 9.2 million job openings, while in June, some 9.5 million people were unemployed.

Dozens of states have blamed the $300-a-week federal top-up to state unemployment benefits for incentivising jobless workers to stay on the sidelines, and have opted to pull out of federal unemployment benefits programmes early as result.

But others point to different factors that are keeping the unemployed from pounding the pavement, including an ongoing lack of childcare options and fears of contracting COVID-19, especially as the Delta variant rages through parts of the US.

Of the 330,000 jobs created last month, the lion’s share – 139,000 – were created by leisure and hospitality firms. But that also marked the smallest gain since February.