16 June 2019

ADP Reports Stronger-than-Expected January Payrolls

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Private-sector hiring was better-than-expected in January, the latest indication that the U.S. labor market remains solid even as some pockets of the economy show signs of cooling. Private payrolls in the U.S. increased by 205,000 last month, said payroll processor Automatic Data Processing Inc. and forecasting firm Moody’s Analytics. The report is based on data collected from ADP clients in addition to lagged government data.

Economists surveyed by The Wall Street Journal expected an increase of 190,000. The December increase was revised higher by 10,000 to 267,000. Monthly gains in private payrolls continue to be powered by the service sector, which represents most of the economy’s jobs and has been offsetting a manufacturing sector beset by a stronger dollar and sharply lower energy prices. Service-providing firms added 192,000 workers in January, again buoyed by firms offering professional and business services, though hiring by service providers eased from an upwardly revised 237,000 in December.

That is as manufacturers halted hiring at the start of the year after growing payrolls modestly at the end of 2015, and energy companies continue to cut jobs as the rout in energy prices intensifies. Goods-producing firms hired 13,000 workers last month, down from 30,000 in December.

While private companies, overall, continued to hire at a solid clip last month, a pullback in hiring at big firms was behind the deceleration in overall payroll growth from December. Companies with 500 or more employees hired 44,000 workers last month, halved from a month earlier.

Medium-size businesses hired 82,000 workers, up from 77,000 a month earlier, while small companies added 79,000, down from an upwardly revised 101,000 at the end of the year.

The ADP report comes ahead of the Bureau of Labor Statistics’s employment-situation report, due out Friday morning. ADP lags behind the government’s initial private payroll estimate by a month. In December, the initially reported ADP figure fell 35,000 short of the government’s number; in November, ADP came in 6,000 higher than the BLS number after falling short by 87,000 in October.

Economists polled by The Wall Street Journal expect the BLS to report an increase of 186,000 in January nonfarm payrolls, down from a much stronger-than-expected 292,000 a month earlier.

Monthly gains in employment of around 200,000 are still pretty impressive in an economy with a 5% unemployment rate, said Paul Ashworth, chief U.S. economist at Capital Economics. Activity may be suffering a temporary blip, but the labor market is doing fine, he said.

Click here to access the full article on The Wall Street Journal.

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