• Market Crumbs

Market Awaits July Nonfarm Payrolls Report

Image via Markus Winkler on Unsplash

Ahead of today's July nonfarm payrolls report, conflicting employment data in recent days has painted an unclear picture of the U.S. jobs market.

Wednesday's release from ADP and Moody's Analytics showed private payrolls increased by 167,000 in July, well below the estimate of one million jobs created. Payrolls growth was seen at companies with fewer than 50 employees and large companies, while businesses with between 50 and 499 employees saw a decline of 25,000 jobs. June's total was revised higher but still barely puts a dent in the nearly 20 million jobs lost in March and April.

"The labor market recovery slowed in the month of July," co-head of the ADP Research Institute Ahu Yildirmaz said. "We have seen the slowdown impact businesses across all sizes and sectors."

Yesterday saw two other employment reports released sending mixed messages.

Initial jobless claims totaled 1.186 million last week, marking the lowest total since the coronavirus halted the U.S. economy, according to the U.S. Department of Labor. While it marks the lowest total in recent months, jobless claims are still firmly above one million for the 20th-consecutive week. Prior to the coronavirus pandemic, the single month record was 695,000 in 1982.

Continuing claims also remain elevated. Continuing claims, which are those who have collected benefits for two straight weeks, dropped by 844,000 to 16.1 million.

Also yesterday, Challenger, Gray & Christmas released a report showing layoffs increased by 54% in July from the previous month. Layoffs by U.S. employers totaled 262,649 in July compared to 246,507 employees being hired. July's job cuts marked the third-highest monthly total since the coronavirus began.

"The downturn is far from over, especially as COVID cases rise around the country," Challenger, Gray & Christmas senior vice president Andrew Challenger said. "Consumers are buying fewer goods and services, businesses are closing, and bankruptcies are rising."

COVID-19 was named as the reason for just over 50% of the job cuts in July, according to Challenger, Gray & Christmas. The remainder were attributed to market conditions, a downturn in demand and bankruptcies.

"It is clear that many job losses are now permanent, and it will be challenging for many workers to find new jobs and feel safe taking jobs that are public-facing," Challenger said.

With employment data over the last few days painting a mixed picture, it's clear that the jobs market has a long way to go to recover all of the jobs lost since the pandemic began.

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