Prime Highlights:
U.S. private payrolls grew by 183,000 in January, surpassing expectations and slightly outpacing December’s revised figure of 176,000.
Pay for workers who remained in their jobs rose at a 4.7% annual rate, a slight increase from December’s 4.6%.
Key Background:
Private payrolls expanded by 183,000 in January, surpassing expectations, according to a report from ADP. This increase was slightly higher than the 176,000 added in December, which had been revised upward from an initial estimate of 122,000. Economists had anticipated a gain of 150,000 jobs for January.
The ADP report also revealed that wages for workers who remained in their positions grew at an annual rate of 4.7%, which marked a 0.1 percentage point increase from December. This wage growth reflects a sustained upward trend in compensation across various sectors.
However, the report highlighted an imbalance within the job creation figures. All of the job gains were seen in the service sector, which added 190,000 positions. In contrast, goods-producing industries experienced a decline of 6,000 jobs. The disparity suggests that while the broader labor market is expanding, certain sectors, particularly manufacturing, are facing challenges. Manufacturing alone saw a loss of 13,000 positions.
The sectors that led job creation included trade, transportation, and utilities with 56,000 new jobs, followed by leisure and hospitality with 54,000. Education and health services also added 20,000 jobs. Conversely, the business services and production sectors saw weaker growth, signaling a divergence in the labor market’s performance.
The ADP report is closely watched by Federal Reserve officials, who are monitoring employment data as they consider their next policy moves. Last year, the Fed reduced interest rates by one percentage point in an effort to support a labor market that had shown signs of slowing. The ADP report serves as a precursor to the more widely anticipated Bureau of Labor Statistics (BLS) report, set for release on Friday. The BLS report is expected to show a gain of 169,000 jobs and an unemployment rate of 4.1%. The ADP data is often seen as a precursor to the BLS report, though the two figures can differ significantly. ADP continues to expand its sample size, which now includes 14.8 million workers, up from 10 million at the time of its inception.
