January ADP Report: job creation weakens

The latest data from payroll processor ADP (Automatic Data Processing Inc.) reveal the private sector added 213,000 workers in January, well below the 224,000 increase analysts have forecast and the lowest job growth since September. This was also much lower than the 253,000 reading for the prior month.

According to the January ADP National Employment Report, Private sector midsize businesses (firms with between 50 to 499 employees) added 95,000 jobs. This is the lone segment that showed a positive job growth in January. Large companies those that have 500 or more employees) added only 40,000 jobs in January. Meanwhile, small businesses (those with 49 or fewer employees) increased by 78,000 jobs in January, down from the previous month’s 115,000.

“Employment posted another solid gain in January, although the pace of growth is slower than in recent months,” noted Moody’s Analytics ‘ chief economist Mark Zandi. “Businesses in the energy and supplying industries are already scaling back payrolls in reaction to the collapse in oil prices, while industries benefiting from the lower prices have been slower to increase their hiring. All indications are that the job market will continue to improve in 2015.”

Employment has declined on a sector-by-sector basis. Goods-producing employment increased 31,000, down from December’s 47,000. Meanwhile, service-providing employment rose by 183,000, compared to 207,000 added in December.

By industry, construction employment added 18,000 jobs, manufacturing added 14,000 (23,000 in December), while financial activities rose by 11,000 jobs. Trade/transportation/utilities and professional/business services led the five industries in January (54,000 and 42,000, respectively).

Widely distributed to the public for free each month, the ADP National Employment Report is created by ADP, a global leader in providing Human Capital Management (HCM) solutions, in partnership with Moody’s Analytics. The report is derived from ADP’s actual payroll data and measures the seasonally-adjusted change in total non-farm private employment each month.

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