The ADP employment report for January was released this morning. It shows that there were 170,000 private sector jobs created in January. This is the 23rd straight month of private sector job growth since the stimulus programs were enacted. This was slightly less than predicted.
This is a good sign for the economy and good for the 170,000 families with jobs but it is more bad news for Republican candidates who are banking on the economy getting worse. They will ignore this news in their rhetoric in any case.
ADP tracks private sector job growth. The official Bureau of Labor Statistics (BLS) employment report will be released later this week. The BLS report factors in public sector job growth. That is likely to show a much smaller job increase since state and local governments are continuing to reduce their payroll due to budget cuts.
The good news behind the good news is that while the service industry accounted for most of the job growth, manufacturing jobs increased by 10,000 in January. This reverses a long trend of job losses in manufacturing.
The growth of 152,000 jobs in the service sector is also good news because that means consumers were still spending in January after Christmas. Consumer spending is the fuel for economic growth. If consumers spend, jobs are created. The January figures seem to point to continued growth.
The construction industry also showed an increase of 2,000 jobs in January. That has been the hardest it sector of our economy. Winter is a slow season for the construction industry so any growth is encouraging. This was down from the 9,000 construction jobs added in January.
The other thing the report shows is that small businesses are once again leading the way to recovery. Companies that employ 50 or fewer employees added 95,000 jobs while medium sized businesses added 72,000 new workers. Small businesses added 11,000 employees in the goods producing sector which includes manufacturing.
Small business accounts for most job growth and the rebound in that sector bodes well for the future.
Clearly more job growth is needed to erase the jobs lost in the Recession and bring the unemployment rate down. However, 3,000,000 jobs were lost in the last year of the Bush administration and another 3,000,000 wee lost in the first year of the Obama administration before the stimulus programs took affect. However, a 23 month upward trend is encouraging.
We will see what the BLS report indicates later this week.
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