Private survey shows employers added 192,000 jobs in January
Private-sector employers added 192,000 jobs in January, more than economists had expected, indicating Friday’s jobs report from the government may be a good one.
The numbers, from a private survey by payroll processor ADP, provided a glimmer of optimism about the economy the same morning the government reported the nation’s GDP contracted in the fourth quarter.
“It feels to me that the job market is improving,” said Mark Zandi, chief economist for Moody’s Analytics. “Job growth has accelerated.”
Job growth is now hovering at about 175,000 jobs a month, he said, which should be enough to bring the unemployment rate down every month. Zandi predicts the unemployment rate, currently at 7.8%, will fall to 7.3% by the end of the year, and will dip below 7% by this time next year.
Although the ADP report showed weakness in the manufacturing sector, probably related to sluggish European economies, it showed growth in construction, trade and professional and business services.
Small businesses, with one to 49 employees, provided the bulk of the hiring, ADP said. Small businesses added 115,000 jobs. Medium businesses, with 50 to 499 employees, added 79,000. Large businesses actually shed 2,000 jobs in January.
The ADP report only tracks private-sector employment, while Friday’s jobs report also includes the government sector, which has been contracting for the better part of two years. The numbers usually provide some guidance to economists about what to expect from the national job figures, although last month, ADP showed employers had added 215,000 private-sector jobs, while the government figures showed that the private sector added just 168,000.
Zandi was quick to emphasize the good news about the ADP report, while downplaying the surprising GDP contraction. He said that when the government revises the number, he expects it will show growth, rather than contraction, in the fourth quarter.
“I will be surprised if we end up with negative quarter,” he said.
Still, GDP growth will only grow 1.5% in the first quarter of this year, he said, which is not a very impressive number. That’s because a payroll tax was restored after two years, meaning consumers have less take-home pay, and probably will spend less as they adjust to their new finances.
The Dow Jones Industrial Average, on the brink of passing 14,000, was down in early market trading.
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