Employment in the private sector expanded by 978,000 in May, far surpassing April’s 654,000 with the biggest gain since June 2020, according to the ADP National Employment Report on Thursday (June 3). Overall, services were responsible for adding 850,000 jobs and goods-producing sectors gained 128,000 positions.
The increase in private payrolls was the largest since June 2020 and showed a surge of 440,000 new jobs in leisure and hospitality, the hardest-hit industry sector during the pandemic.
“Private payrolls showed a marked improvement from recent months and the strongest gain since the early days of the recovery,” said ADP’s Chief Economist Nela Richardson. “Companies of all sizes experienced an uptick in job growth, reflecting the improving nature of the pandemic and economy.”
Education and health services saw a boost, adding 139,000 jobs, primarily in healthcare. Trade, transportation and utilities gained 118,000 new jobs, while professional and business services upped jobs by 68,000. Jobs in the other services category showed an increase of 69,000.
Medium-sized businesses — those with 50-499 employees — added 338,000 jobs, ADP said. Small businesses — with no more than 49 workers— gained 333,000 new jobs. Large businesses — which have at least 500 employees — created 308,000 jobs.
On the goods-producing side, construction payrolls increased by 65,000, while manufacturing added 52,000 jobs.
“While goods producers grew at a steady pace, it is service providers that accounted for the lion’s share of the gains, far outpacing the monthly average in the last six months,” Richardson said in the report.
A new initiative from the U.S. Chamber of Commerce, America Works, aims to address the worker shortage as the country reopens following the pandemic. The nationwide shortage is considered to have hit crisis-level proportions.
Despite the increase in vaccinations and the decrease in the number of COVID-19 infections, businesses reopening their doors are faced with a lack of people returning to the workforce. The Fed’s Beige Book showed that the U.S. economy grew at a moderate pace from early April to late May; however, some companies are struggling to hire low-wage hourly workers, skilled tradespeople and truck drivers.