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Hiring by the US private sector rose more than expected this month driven by the leisure and hospitality sectors, as rising vaccinations and reopenings across the country continue to boost the labour market.

US private payrolls rose by 692,000 in June, according to a report from payroll processor ADP. That was ahead of economists’ expectations for a 600,000 increase, according to a survey by Refinitiv, though it was slower than the 886,000 jobs added in May.

“The labour market recovery remains robust, with June closing out a strong second quarter of jobs growth,” said Nela Richardson, chief economist at ADP.

While payrolls are nearly 7m short of pre-pandemic levels, about 3m jobs have been created since the start of the year.

Large businesses with more than 500 employees accounted for the bulk of the growth with 240,000 hires. And the service sector, which was hardest hit by pandemic-driven lockdowns, drove hiring, adding 624,000 jobs and within that, leisure and hospitality accounted for 332,000 jobs. Meanwhile, the goods-producing sector created just 68,000 jobs.

“Service providers, the hardest hit sector, continue to do the heavy lifting, with leisure and hospitality posting the strongest gain as businesses begin to reopen to full capacity across the country,” Richardson added.

An increase in vaccinations — more than 154m Americans are fully vaccinated, about 46.4 per cent of the population — and the reopening of major economic centres such as New York and California have set the stage for a rebound in hiring.

However, corporate America continues to grapple with labour shortages, caused by worries about catching Covid-19 in the workplace, childcare limitations and according to some economists extended federal unemployment benefits.

The data come ahead of Friday’s non-farm payroll report, which is expected to show the US economy created 700,000 jobs and the unemployment rate edged lower to 5.7 per cent, from 5.8 per cent previously.

“While we are expecting the official figures to show a similarly widespread improvement in labour market conditions in June, the backdrop of severe labour shortages means we think the consensus estimate for a 700,000 rise in non-farm payrolls is too optimistic,” said Michael Pearce, economist at Capital Economics.

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