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ADP reports 175,000 private sector jobs added in January

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The first jobs report of 2014 was released Wednesday. The ADP Employment Report finds that 175,000 private sector jobs were added to the economy in January. This is down from the 227,000 jobs ADP reported in its revised December report.

The Employment Report, produced by ADP in conjunction with Moody’s Analytics is derived from ADP’s actual payroll data and extrapolated to the broader job market. It measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.

Carlos Rodriguez, president and chief executive officer of ADP, said in a release that the 175,000 jobs are in line with monthly growth throughout 2013.

As is always the case, the vast majority of new jobs were in the service sector which added 160,000 of the 175,000 jobs. The goods-producing sector increased by just fewer than 16,000 jobs.

Small business led the way once again producing 75,000 new jobs, and those with fewer than 19 employees accounted for 42,000 jobs. Medium size businesses with 50-499 workers added 66,000 jobs. Large businesses employing over 1,000 added 31,000 new jobs. This is a further sign that large companies are investing some of their profits back into business expansion.

The construction sector continued to grow despite a very bad winter. In January a total of 25,000 new construction jobs were added. This gain followed increases of 30,000 and 32,000 in the prior two months in the construction sector.

Manufacturing lost jobs in January; the decline of 12,000 followed a revised gain of 16,000 in the prior month. This was the first decline in industry payrolls since July 2013 according to ADP.

Service-providing industries added 160,000 jobs in January. This was down from an upwardly-revised December figure of 177,000. The ADP National Employment Report indicates that professional/ business services contributed the most to growth in service-providing industries, adding 49,000 jobs. This was well below the average gain of the prior two months of 65,000. Expansion in trade, transportation, and utilities slowed to a gain of 30,000 jobs in January. Employment in financial activities was flat over the month, following two consecutive months of gains of 6,000.

Mark Zandi, chief economist of Moody’s Analytics, said, "Cold and stormy winter weather continued to weigh on the job numbers. 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.”

One thing that could account for somewhat slower job growth, in addition to the weather, are concerns with the global economy. Reports indicate a slow-down in China. The stock market had a bad week last week which spilled over into this current week and most of that is attributed to China anxiety. Lower corporate profits and a slower-than-hoped-for holiday shopping season were also factors.

The bottom line is the economy is growing, but jobs are growing at a slower pace than necessary to erase unemployment. It is doubtful, however, that Congress will do anything to stimulate jobs this year.

ADP does not take into account government jobs, nor does it measure unemployment. The official jobs report, which includes those items, will be released by the Bureau of Labor Statistics Friday. It will be interesting to see if they revise December’s terrible numbers upward.

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