ADP Finds Private Sector Added 213,000 Jobs in January

Private sector employers added a healthy 213,000 jobs last month, according to payroll giant ADP, even though small businesses and some industry sectors slowed their hiring pace.

Small businesses added 78,000 jobs last month, including 38,000 at businesses with between one and 19 employees and 40,000 at companies with between 20 and 49 employees. However, that was down from 115,000 in December.

Midsize businesses with between 50 and 499 employees gained 95,000 jobs in January, up from 78,000 in December.

Large businesses added 40,000 jobs in January, including 14,000 at businesses with between 500 and 999 employees and 26,000 at businesses with 1,000 employees or more. But that was down from 61,000 in December.

Goods-producing employment increased by 31,000 jobs in January, down from 47,000 jobs gained in December. The construction industry added 18,000 jobs, down from last month’s gain of 26,000. Meanwhile, manufacturing added 14,000 jobs in January, below December’s 23,000.

Service-providing employment rose by 183,000 jobs in January, but that was down from 207,000 in December. The professional and business services sector, which includes tax and accounting along with other services, contributed 42,000 jobs in January, but that represented a large drop-off from December’s gain of 72,000 jobs.

The 11,000 new jobs added in the financial activities sector was also down from last month’s 14,000, but still well above the average of the past 12 months, according to ADP. 

Expansion in the combined trade, transportation and utilities sector grew by 54,000, a sharp increase from December’s 40,000. Franchise jobs increased by 26,000 in January.

“The job market is continuing to perform well,” said Mark Zandi, chief economist at Moody’s Analytics, which compiles the monthly employment report with ADP, during a conference call with reporters Wednesday. “The 213,000 gain in private employment for the month is a bit on the soft side relative to expectations, but in the grand scheme of things anything over 200,000 in a month is a good report. If you annualize that number, that means 2.5 million jobs for the year. At that pace of job growth we’ll continue to work down the slack in the labor market and the employment rate, which is 5.6 percent, will be closer to 5 percent by this time next year.”

The job gains were broad based across various industries and business sizes, Zandi pointed out, and they came amid major changes in the macro economy, including the collapse in oil prices, the sharp decline in long-term interest rates, and a surge in the value of the dollar.

The slowdown in job gains in professional and business services could just be due to a seasonal adjustment in some industries, according to Zandi. “Professional services is tricky because it’s a melange of lots of different activities, everything from temp jobs to legal and accounting services, so it’s a quite varied set of industries and that complicates the seasonal adjustment process,” he explained. “Each of these industries has very different kinds of seasonal patterns. Often when we see a significant acceleration or deceleration in job creation in the professional services sector, it has more to do with these seasonal adjustment issues than it does with any change in the reality of what’s going on for businesses in that sector of the economy.”

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