ADP released its Employment Report for December on Wednesday. The news was good for the economy—238,000 private sector jobs were added in December. Last month replaced November as the best month for private sector job creation in 2013. The 238,000 jobs added in December is up from the 229,000 jobs in November, and the 209,000 reported in December 2012.
“It’s encouraging news that hopefully bodes well for 2014," Carlos Rodriguez, president and chief executive officer of ADP said in the press release.
Small businesses were responsible for 108,000 of the 238,000 jobs. Of those, businesses with 1-19 employees added 55,000, and those with 20-49 workers added 53,000. Small business is responsible for most job creation in the nation. The fact small business growth is strong bodes well because it shows the owners have confidence the economy will continue producing customers.
Another good sign in the report is the strong growth in hiring by large companies. These firms sat on billions of dollars in profits and did not hire new workers during much of the recovery. The last few months, however, big companies have begun hiring again. Companies with over 1,000 employees added 74,000 new jobs in December. There was shrinkage of 3,000 jobs in firms with 500-999 workers resulting in a net increase of 71,000 workers.
Medium sized firms had strong job growth as well adding 59,000 workers.
As is always the case in our service economy, 170,000 of the jobs added were in the service sector. Private payrolls increased by nearly 1.9 million jobs in the service-providing industries in 2013. The bulk of this increase was split evenly between transportation/trade/utilities and professional/business services. Finance brought up the rear gaining just 59,000 in the last twelve months.
The goods producing sector added 69,000 jobs in December, up from 46,000 in November. The construction industry added 48,000 jobs as the home building industry continues to rebound. This was the strongest month for the industry since 2006. Manufacturing showed another month of growth with 19,000 workers.
Mark Zandi, chief economist of Moody’s Analytics, a partner with ADP in producing the Employment Report said, "The job market ended 2013 on a high note. Job growth meaningfully accelerated and is now over 200,000 per month. Job gains are broad-based across industries, most notably in construction and manufacturing. It appears that businesses are growing more confident and increasing their hiring.”
The official jobs report will be released Friday by the Bureau of Labor Statistics. That report will cover public sector jobs and well as private sector jobs. The BLS calculates the number of unemployed persons, so we need to wait for their report to see if the unemployment rate continues to drop.
This is one more report with good news about the economy in recent weeks. GDP grew at a surprising 4.1% in the third quarter, and last month the unemployment rate dropped. One danger sign on the horizon is the fact that Congress did not extend unemployment benefits for 1.3 million Americans. That number will grow to higher each month if Congress does not act. Economists estimate this will cost the economy 240,000 jobs. This will show up beginning next month.
There is little reason to hope Congress will act, but anything is possible in an election year.