WASHINGTON: U.S. private employers hired far fewer workers than expected in July as companies exhausted loans to help with wages and new COVID-19 infections flared up across the country, supporting the view that the nascent economic recovery was faltering.
Hiring weakened across the board last month. Payrolls for medium-sized businesses with 50 to 499 employees fell 25,000. The sharp step-down in hiring was attributed to the expiration of the U.S. government's Paycheck Protection Program and the resurgence in coronavirus cases. In a separate report on Wednesday, the Institute for Supply Management said its services index increased to a reading of 58.1 last month, the highest since March 2019, from 57.1 in June. A reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of U.S. economic activity.
The ISM survey's measure of new orders for the services industry soared to a record 67.7 in July from a reading of 61.6 in June. Its index of services industry employment, however, fell to a reading of 42.1 last month from 43.1 in June, contracting for a fifth straight month. Companies reported either freezing hiring or limiting recruitment.
According to a Reuters survey of economists, nonfarm payrolls likely increased by 1.6 million in July, down sharply from the record 4.8 million jobs created in June. That would leave employment about 13.1 million jobs below the pre-pandemic level.