Payroll processor ADP released a report on Wednesday showing much weaker than expected private sector job growth in the month of August.
ADP said private sector employment increased by 428,000 jobs in August after rising by an upwardly revised 212,000 jobs in July.
Economists had expected employment to jump by 950,000 jobs compared to the addition of 167,000 jobs originally reported for the previous month.
“The August job postings demonstrate a slow recovery,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.
She added, “Job gains are minimal, and businesses across all sizes and sectors have yet to come close to their pre-COVID-19 employment levels.”
The report said employment in the service-providing sector climbed by 389,000 jobs in August, reflecting notable job growth in the leisure and hospitality and healthcare and social assistance industries.
Employment in the goods-producing sector edged up by 40,000 jobs, as the construction industry added 28,000 jobs and manufacturing employment inched up by 9,000 jobs.
ADP also said employment at large businesses jumped by 298,000 jobs, while employment at mid-sized and small businesses rose by 79,000 jobs and 52,000 jobs, respectively.
On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report, which includes both public and private sector jobs.
Economists currently expect employment to jump by 1.400 million jobs in August after surging up by 1.763 million jobs in July. The unemployment rate is expected to dip to 9.8 percent from 10.2 percent.
“The ADP figures massively overstated the slowdown in payroll growth in July, but we suspect they will be closer to the mark in August,” said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, “Note the official non-farm payrolls figure will be boosted by the nearly 250,000 temporary Census hires last month, which are not counted in the ADP measure.”