Private US firms added 174,000 jobs in January, ADP said Wednesday.
That’s good news to the extent you can rely on it, but we know from months of experience that ADP is a poor predictor of nonfarm payrolls in the post-pandemic world.
The market was looking for just 70,000, so the headline print is a considerable beat. (The scales on the visual, below, have been adjusted to “trim” the anomalous losses and gains in and around the first lockdowns last year).
The breakdown shows a welcome reprieve for the services sector, which added 156,000 of the total positions.
Gains were concentrated in health and education as well as professional and business. Leisure and hospitality clawed back 35,000 of the (downwardly revised) 79,000 positions shed in December’s report.
Construction comprised almost the entirety of the gains in the goods-producing sector.
By firm size, January’s job creation was relatively egalitarian. Small employers added 51,000 jobs, midsized 84,000, and large 39,000.
Again, this is optically good news, and it ostensibly bodes well for NFP. I use “optically” and “ostensibly” because any kind of reporting related to the US labor market in our post-pandemic reality must be replete with cautionary caveats.
It’s not just that ADP has been unreliable vis-à-vis NFP, it’s also that leisure and hospitality needs a huge gain to offset December’s horrendous drop. While the comparison is apples to oranges, these figures don’t point to any kind of sudden renaissance in hiring in that most critical sector of the US economy.
Anyway, let’s just call this “solid” and move on.
The “trimmed” chart is much easier to read, it’s a good improvement.