Economic Snapshot: Private sector employment increases by 172,000 jobs

While private sector employment has been increasing each month since April, those numbers are weighed down by continued losses in the manufacturing sector.

ADP employment report

Private sector employment increased by 172,000 jobs from May to June, up from the downwardly revised 168,000 jobs last month.

Small businesses contributed most heavily to the increase, adding 95,000 jobs in June, up from 84,000 in May. Employment at medium-sized businesses increased by 52,000, down from last month’s 60,000. Large businesses added 25,000 jobs, slightly up from 23,000 in the previous month.

Service-producing employment rose by 208,000 jobs in June, up from May’s 173,000. Professional/business services added 51,000 jobs, up from 47,000 last month. Trade/transformational/utilities grew by 55,000, nearly twice the 27,000 jobs added in the previous month. Financial activities added 2,000 jobs, down from May’s 13,000.

Goods-producing employment was down by 36,000 jobs in June, following a loss of 5,000 in May. The construction industry lost 5,000 jobs, offsetting the gain of 9,000 in May. Manufacturing lost 21,000 jobs after losing 3,000 last month.

“Since the start of 2016, average monthly job creation has slightly dropped,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “Lackluster global growth, low commodity prices, and an unfavorable exchange rate continue to weigh on U.S. companies, especially larger companies.”

ISM non-manufacturing index

The ISM Non-Manufacturing Index registered 56.5 percent in June, up 3.6 percentage points from the May reading of 52.9 percent. This represents continued growth in the non-manufacturing sector at a faster rate. Economic activity in the non-manufacturing sector grew in June for the 77th consecutive month.

The Business Activity Index increased 4.4 percentage points to 59.5 percent, reflecting growth for the 83rd consecutive month and at a faster rate in June. The New Orders Index registered 59.9 percent, 5.7 percentage points higher than the reading of 54.2 percent.

The Employment Index rose 3.0 percentage points to 52.7 percent, following a month of contraction. The Prices Index decreased 0.1 percentage points to 55.5 percent, indicating prices increased in June for the third consecutive month.

Fifteen of the 18 non-manufacturing industries reported growth in June and three reported contraction.