ADP Finds Private Sector Employers Added 175,000 Jobs in January

Employers in the private sector added 175,000 jobs from December to January, according to payroll giant ADP, as the harsh winter weather apparently put a damper on some hiring.

Nevertheless, the job gains were more or less consistent with recent months, according to the latest ADP National Employment Report, occurring across various sizes of businesses and industries.

Small businesses with between one and 19 employees added 42,000 jobs in January, while small businesses with between 20 and 49 employees gained 33,000 jobs. Midsize businesses with between 50 and 499 employees added 66,000 jobs. Large businesses with between 500 and 999 employees added 4,000 jobs, while larger businesses with 1,000 employees or more gained 31,000 jobs.

The service-providing sector added the bulk of the jobs last month with 160,000 jobs, down from a revised number of 177,000 in December, while the goods-producing sector gained 16,000 jobs, down from a revised number of 50,000 in December.

The professional and business services sector, which includes accounting and tax preparation along with other services, added 49,000 jobs, while the construction industry added 25,000 jobs, despite the cold weather. The combined trade, transportation and utilities sector added 30,000 jobs, but the manufacturing industry lost 12,000 jobs. Financial activities employment was flat over the month, following two consecutive months of gains of 6,000 apiece.

"Cold and stormy winter weather continued to weigh on the job numbers,” said Mark Zandi, chief economist of Moody’s Analytics, which compiles the monthly employment report with ADP. “Underlying job growth, abstracting from the weather, remains sturdy. Gains are broad based across industries and company sizes, the biggest exception being manufacturing, which shed jobs, but that is not expected to continue.”

While the U.S. Bureau of Labor Statistics reported December employment gains of only 74,000 last month, Zandi pointed out that the way the BLS tracks the employment data makes it more subject to weather-related trends. However, he noted that there were several anomalies in last month's BLS report, which indicated a loss of approximately 20,000 accounting jobs. But Zandi expects that number to be revised by the BLS.

“It's impossible to explain numbers like roughly 20,000 accountants disappearing in the month of December,” he said. “I just don't think that's reality, and I think ultimately the data will be revised and, at the very least, the December number from the BLS will be revised up.”

The BLS is expected to report its employment numbers for January this coming Friday. Zandi believes the unemployment rate will decline from the current rate of 6.7 percent in the months ahead, but not because of strong job gains. Instead he anticipates that a declining labor force participation rate will push down the unemployment rate by two-tenths or three-tenths of a percentage point in the next few months. With Congress unlikely to agree to pass an extension of the Emergency Unemployment Compensation program anytime soon, he believes more Americans will simply drop out of the labor force. Combined with the continuing retirement of Baby Boomers and stagnant wages, the unemployment rate may fall to close to 6 percent by the end of the year.

For reprint and licensing requests for this article, click here.
Payroll Recruiting
MORE FROM ACCOUNTING TODAY