WASHINGTON: After recovering strongly as widespread vaccinations allowed for an easing of pandemic restrictions, hiring by American firms slowed sharply in July, raising fears the US recovery may be running out of steam amid increasing Covid-19 infections.
The setback reported in data released Wednesday comes as President Joe Biden’s infrastructure and jobs plan nears approval in Congress, while he continues to push for massive spending on programs to support the economy and hiring, reports AFP.
The 330,000 private jobs payroll services firm ADP said the economy added last month was far smaller than economists had expected and less than half the number gained in June.
That could be a worrisome sign ahead of the government’s monthly jobs report due out Friday, which economists expect could finally deliver another million-job increase.
“The labor market recovery continues to exhibit uneven progress, but progress nonetheless,” ADP chief economist Nela Richardson said in a statement.
As businesses like hotels and restaurants were able to reopen, the hard-hit leisure and hospitality sector has been hiring workers at a brisk pace since March.
But the ADP data showed a gain of just 139,000 jobs in the industry last month—the biggest of any sector by far but less than half of the June increase.
“The slowdown in the recovery has also impacted companies of all sizes. Bottlenecks in hiring continue to hold back stronger gains, particularly in light of new Covid-19 concerns tied to viral variants,” Richardson said.
But Treasury Secretary Janet Yellen said Wednesday the country is headed towards full employment after GDP returned to its pre-pandemic size in the second quarter—which she credited to the unprecedented government response.
However, there are issues “beneath the surface” at work in the labor market, including racial disparities that she said public spending can help address.
On top of his $1 trillion infrastructure plan, Biden has proposed $3.5 trillion in spending on childcare, education and health.