Home Mortgage loan The US private sector wage bill is growing steadily; while waiting...

The US private sector wage bill is growing steadily; while waiting for the rebound in home sales

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People line up outside a recently reopened career center for in-person appointments in Louisville, US on April 15, 2021. REUTERS / Amira Karaoud

  • Private payroll increases by 692,000, May revised downward
  • Leisure and hospitality account for almost half of jobs
  • The construction rises steadily; slowdown in manufacturing
  • Pending home sales rise 8% in May

WASHINGTON, June 30 (Reuters) – The private sector payroll in the United States rose more than expected in June as companies rushed to boost production and services amid the rapid reopening of the economy, although a shortage of volunteer workers continues to weigh on the recovery of the labor market.

The ADP national employment report released on Wednesday showed hirings in the leisure and hospitality sector accounted for nearly half of the increase in private payrolls this month. The growth of the wage bill in the manufacturing sector has slowed, probably reflecting labor shortages as well as the scarcity of raw materials. A global semiconductor shortage is hampering the production of motor vehicles and some household appliances.

“The job market continues to heal,” said Rubeela Farooqi, chief US economist at High Frequency Economics in White Plains, New York. “Job growth is expected to accelerate with a wider reopening, but the timing is uncertain as it is not clear how quickly supply constraints will ease.”

The private payroll increased by 692,000 jobs in June. Data for May has been revised down to show 886,000 jobs added instead of the 978,000 originally reported. Economists polled by Reuters had predicted that the private wage bill would increase by 600,000 jobs.

More than 150 million Americans have been fully vaccinated against COVID-19, allowing authorities to remove pandemic-related restrictions on businesses and hide warrants for those vaccinated.

Employment gains in June were evenly distributed among small, medium and large businesses, indicating that the economic recovery from the pandemic was broadening.

The recreation and hospitality payroll increased by 332,000 jobs and there were solid gains in education and health services. Factories added just 19,000 jobs, below the monthly average of 43,000 jobs over the past three months.

Hiring on construction sites increased by 47,000 jobs. The sector is supported by strong demand for housing, thanks to historically low mortgage rates and a shift to home offices during the pandemic.

A separate report from the National Association of Realtors released on Wednesday showed that previously owned home purchase contracts rebounded 8% in May. But the housing market is grappling with a severe shortage of homes for sale, pushing prices up far beyond the reach of some first-time buyers. Read more

Applications for loans to buy a home fell last week, the Mortgage Bankers Association said in another report. Home purchase loans were down 17.3% from the same period last year. Read more

“We expect record home prices and limited inventories of existing homes for sale to continue to weigh on home sales,” said Nancy Vanden Houten, chief economist at Oxford Economics in New York City.

Stocks on Wall Street were mixed. The dollar appreciated against a basket of currencies. US Treasury prices have gone up.

WORK CRISIS

The ADP report is being developed in conjunction with Moody’s Analytics and was released Friday ahead of the more comprehensive and closely watched employment report from the Department of Labor. But it has a poor track record of private payroll prediction from the Bureau of Labor Statistics due to methodological differences.

The ADP report has overestimated private payroll gains reflected in BLS data in recent months after underestimating that growth during much of the employment recovery, which began in May 2020.

“It remains difficult to use ADP data to accurately predict BLS data,” said Daniel Silver, economist at JPMorgan in New York City.

According to a Reuters survey of economists, private payrolls probably increased by 600,000 jobs in June after increasing by 492,000 in May. With government hiring expected to increase by around 100,000, this would push the overall payroll up to 700,000 in June.

The economy created 559,000 jobs in May. A shortage of volunteer workers is frustrating efforts to increase hiring. There was a record 9.3 million job postings in April. Read more

The precise cause of the labor shortage is the subject of fierce debate – often political. Economists typically point to several factors, one of which is the unusually generous unemployment benefits, including a weekly $ 300 grant from the federal government, which was part of the Biden administration’s pandemic relief program.

A lack of child care facilities, as some centers closed during the pandemic have never reopened, is also keeping some parents at home, and it also appears that some workers remain concerned about the health risks associated with returning to work.

At least 26 states mostly run by Republican governors are ending federally funded unemployment benefits before the September 6 expiration date. No evidence has so far emerged that early layoffs, which began on June 12 and will continue until July 31, are attracting the unemployed to jobs, although the number of benefit recipients is declining more rapidly in these. States. Read more

A Indeed job search engine survey found that while the vast majority of the unemployed indicated that they would like to start looking for work within the next three months, many did not express a sense of urgency. He showed that increasing vaccinations, shrinking savings and opening schools in the fall will be key catalysts.

About 9.3 million people are officially classified as unemployed. However, job growth could surprise on the upside this month. The Conference Board’s survey of consumers showed that households were extremely optimistic about their view of the job market.

The survey’s so-called labor market differential, derived from data on respondents’ opinions about whether jobs are abundant or hard to find, jumped in June to its highest level since 2000. read more after

Reporting by Lucia Mutikani; additional reporting by Evan Sully Editing by Dan Burns and Andrea Ricci

Our standards: Thomson Reuters Trust Principles.

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