Private sector added 291,000 jobs in January, says ADP
Private sector employers added 291,000 jobs in January, according to payroll giant ADP, in a strong showing for the economy, despite fears of the coronavirus.
Small businesses accounted for 94,000 of the jobs added last month, including 26,000 at businesses with between one and 19 employees, and 68,000 at businesses with between 20 and 49 employees. Midsize businesses with between 50 and 499 employees gained 128,000 jobs in January. Large businesses added 69,000 jobs, including 27,000 at organizations with between 500 and 999 employees, and 42,000 at companies with 1,000 employees or more.
The service-providing sector added 237,000 private sector jobs last month, including 49,000 in professional and business services such as accounting and tax preparation. The goods-producing sector added 54,000 jobs. Franchises added 45,100 jobs.
"The labor market experienced expanded payrolls in January," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, in a statement. "Goods producers added jobs, particularly in construction and manufacturing, while service providers experienced a large gain, led by leisure and hospitality. Job creation was strong among midsized companies, though small companies enjoyed the strongest performance in the last 18 months."
Mark Zandi, chief economist at Moody’s Analytics, which compiles the monthly national employment report with ADP, predicted that the U.S. Bureau of Labor Statistics will have a significantly downward benchmark revision of about 500,000 jobs lower than the last benchmark revision in March 2019 when it comes out with its jobs report Friday.
“That will reflect the trajectory of job growth after that,” he said during a conference call with reporters Wednesday. “I think we will get a much better sense of how the economy has been doing over the past couple of years and how it’s doing now. My sense is that after accounting for the revisions and all the other factors that are affecting the data on a temporary basis, underlying job growth is about 150,000 jobs, which is good. It’s about the pace of job growth necessary at this time to absorb the growth in the number of people coming into the workforce. On the high side, the job market is strong and tight. Wage growth has picked up, and there are more job opportunities, so we’re seeing more people that had been on the fringes of the labor force disenfranchised, coming back. In fact, a lot of the labor force growth in recent months has been with formerly disabled workers, which is unusual. It goes to the strength of the labor market, but it’s also obviously a very positive thing. Generally when people go into the Social Security disability program, they don’t go out, given the incentives. That won’t go on forever, and the labor force growth will slow and take job growth with it eventually.”
There are some headwinds facing the economy, such as the problems at Boeing and its 737 Max airline, which has been hitting the manufacturing sector. The growing fears about the coronavirus are also affecting trade with China. The travel restrictions on Chinese visitors to the U.S. are likely to have an impact on the leisure and hospitality industry and the retail sector.
“Right now the U.S. stock market has been up and down and all around, but it seems to be digesting this reasonably well,” said Zandi. “But there’s a lot of script to be written here and it clearly needs to be watched. That’s a wildcard. The bottom line is the virus is going to shave probably two or four tenths of a percent off of GDP in Q1. That’s where the impact on the job market might be most significant. That goes to leisure and hospitality and retailing and those are industries that employ a lot of people.”