The ADP Employment Report showed that private payrolls were much stronger than expected in July, with 324,000 jobs created. Annual pay for job stayers increased 6.2% and job changers saw an average increase of 10.2%. While these pay gains are still high, they have been moderating over the last year.

Leisure and hospitality once again led the way with 201,000 job gains (more than quadruple any other sector), while manufacturing was a weak spot, shedding jobs for the fifth straight month. This correlated with July’s ISM Index, as their survey of purchasing and supply executives nationwide showed a “slowdown in hiring, with attrition, freezes and layoffs actively in place.”

What’s the bottom line? The high level of leisure and hospitality job gains may not continue to bolster the overall private payroll total for much longer, as we have now eclipsed the number of employees in this sector pre-Covid. Plus, the BLS Jobs Report only showed 17,000 leisure and hospitality job gains in July, while the latest Job Openings and Labor Turnover Survey (JOLTS) showed that leisure and hospitality job openings fell to their lowest level since March 2021. The data combined suggests softer job growth in this area to come.

We have seen large discrepancies in the BLS and ADP Employment Reports in recent months, which may be due to issues with seasonal adjustments. This will be something to watch closely heading into the fall.