The private sector added a whopping 978,000 jobs in May, according to payroll company ADP, well above the 680,000 economists expected and the highest level since last summer.
“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.”
The figures could be a good sign ahead of Friday's official jobs report from the Labor Department, though the two reports often vary.
Last month, ADP reported 654,000 new private-sector jobs, but the Labor report came back with a disappointing 266,000, well below the 1 million economists had expected.
The unexpectedly small number threw a wrench in expectations for a quick, straightforward path to recovery from the coronavirus pandemic and led to finger-pointing between Democrats and Republicans over policies such as generous emergency unemployment benefits.
The largest gain in the new ADP report came from leisure and hospitality, the sector that was hit hardest during the pandemic, which saw 440,000 new jobs.
The increased rate of vaccinations in recent months has led to a steady drop in COVID-19 infections, which has allowed local governments to ease restrictions on businesses, such as bars and restaurants, and put people at greater ease regarding the health risks associated with going out.
The Centers for Disease Control and Prevention changed its guidelines on indoor masking in mid-May, doing away with the recommendation that vaccinated people wear face coverings indoors.
Other major boosts in the ADP report came in education and health services, with an increase of 139,000 jobs, and in trade, transportation and utilities, which saw 118,000 new 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 noted.