ADP released its January Employment Report Wednesday which showed that 192,000 private sector jobs were added to the economy in January. ADP only tracks employment by private firms and their report does not include government jobs.
The Employment Report is issued each month in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total non-farm private employment each month on a seasonally-adjusted basis.
The December estimate was revised downward from the 215,000 jobs reported to 185,000 new jobs. The Bureau of Labor Statistics (BLS) indicated that 168,000 private sector jobs were added in November so the revised ADP total moved closer to the official report. The BLS report is considered to be the official jobs report. BLS will release the January numbers next week.
Small Businesses added most jobs
According to ADP, small businesses added the bulk of new jobs. Of the 192,000 new jobs 115,000 were created by businesses employing fewer than 50 people. An additional 79,000 were added by medium businesses employing between 50 and 499 workers. Large companies with more than 1,000 workers actually reduced their payrolls by 9,000.
As has been the case in recent times, the service sector is responsible for most new jobs. ADP reported that 177,000 of the 198,000 new jobs were in the service sector with only a net of 15,000 jobs in the goods producing sector. All but 18,000 of the small business jobs were in the services sector.
Professional and business services and transportation and trade accounted for most of those jobs while manufacturing fell by 3,000. Last month ADP reported a loss in manufacturing jobs, as well. Construction accounted for 15,000 jobs mostly due to a boom in new home construction.
“U.S. private sector employment got off to a good start in 2013, as 192,000 jobs were added during the month of January,” Carlos A. Rodriguez, president and chief executive officer of ADP said in the release. “According to the ADP National Employment Report, private sector employers created an average of 183,000 new jobs per month during the last three months. This is an encouraging sign of steady improvement in the job market.”
Mark Zandi, chief economist of Moody’s Analytics, which produces the report with ADP said,
“The job market is slowly, but steadily, improving. Monthly job gains appear to have accelerated from near 150,000 to closer to 175,000. Construction is finally kicking into gear and more than offsetting the weakness in manufacturing. The recent gains may be overstating any improvement, particularly in the context of recent revivals in growth at the start of the past three years, but the gains are encouraging nonetheless.”
When the official jobs report comes out, the figures might be different due to the way the data is collected, and when it is collected. However, new jobless claims fell to a 5-year low last week so it is anticipated that the BLS report will show similar numbers to ADP. However, local governments have been retracting so the total employment picture may be less robust.
Economy hurt by fiscal cliff fiasco
It takes job growth of 150,000 a month to keep ahead of population growth, so the 192,000 number is a positive sign the recovery is chugging along. However, the economy retracted slightly in December for the first time since 2009.
Analysts and economists say that is most likely due to the uncertainty over the fiscal cliff. Congress waited until New Years Day to pass a bill preventing every American from getting a tax increase. Knowing we might go over the cliff caused a retraction in spending, which hurt the economy.
So, the nation now waits for the next report to assure itself that we are continuing a recovery. If Congress just acted responsibly, the economy would boom. No sign yet that will happen any time soon.
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