SINKING SPRING, PA – APRIL 19: A McDonald’s restaurant on Penn Avenue on April 19, 2021 in Sinking Spring, PA with a message on board that reads “Work here $15 $15 $15”. (Photo by Ben Hastie/MediaNews Group/Reading Eagle via Getty Images)

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Payroll processing firm ADP reported on Wednesday that private sector companies added more jobs in July than expected due to a surge in leisure and hospitality jobs.

Jobs rose to 324,000 for the month due to an increase of 201,000 in hotels, restaurants, bars and allied businesses. This total was well above the Dow Jones consensus estimate of 175,000, although it marked a decrease from the revised 455,000 in June.

The report provides another indication that the US jobs market has retained its strength despite an extended Federal Reserve campaign to slow the economy and reduce inflation.

“The economy is performing better than expected and a healthy labor market continues to support household spending,” said ADP chief economist Nella Richardson. “We’re seeing a slowdown in wage growth without broad-based job losses.”

Service-related industries dominated job creation during the month as the economy continued to transition back from being goods-oriented in the early days covid pandemic, This sector was responsible for 303,000 jobs that month.

Information services added 36,000 positions, with big moves in leisure and hospitality; trade, transportation and utilities increased by 30,000; And the other services category, which includes dry cleaning, housekeeping and the like, contributed 24,000.

Goods producers added only 21,000, as natural resources and mining gained 48,000 but manufacturing lost 36,000. Construction accounted for another 9,000.

ADP also noted that wages rose 6.2% from a year ago, well above the long-term pace but the lowest increase since November 2021.

The ADP report serves as a precursor to Friday’s more widely followed non-farm payrolls count from the Labor Department’s Bureau of Labor Statistics. The numbers can vary widely, as was the case in June when the ADP total of 455,000 was well above the BLS’ 209,000.

In the first six months of the year, ADP averaged 256,000 per month while the BLS was 278,000. The Dow Jones estimate for July’s official government report is 200,000.

The ADP report also showed that job gains were concentrated in firms with fewer than 50 employees, which accounted for 237,000 positions. Companies with 50 to 499 employees added 138,000 jobs, while larger companies lost 67,000.

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