ADP's January National Employment Report is out.
The payroll-processing firm estimates 175,000 workers were hired by private-sector firms in January. Market economists were looking for a 185,000 estimate.
The December estimate from ADP's previous report was revised down to 227,000 from 238,000.
Below is a summary of the data from the release:
Goods-producing employment rose by 16,000 jobs in January, down from a downwardly-revised figure of 50,000 in December. Nearly all of the growth came from the construction industry which added 25,000 jobs over the month; this followed increases of 30,000 and 32,000 in the prior two months. Manufacturing lost jobs in January; the decline of 12,000 followed a revised gain of 16,000 in the prior month and was the first decline in industry payrolls since July 2013.
Service-providing industries added 160,000 jobs in January, down from an upwardly-revised December figure of 177,000. The ADP National Employment Report indicates that professional/business services contributed the most to growth in service-providing industries, adding 49,000 jobs. This was well below the average gain of the prior two months of 65,000. Expansion in trade/transportation/utilities slowed to a gain of 30,000 jobs in January. Financial activities employment was flat over the month, following two consecutive months of gains of 6,000 apiece.
"The U.S. private sector added 175,000 jobs in January, which is in line with the average monthly growth throughout 2013,” said Carlos Rodriguez, president and chief executive officer of ADP.
Mark Zandi, chief economist of Moody’s Analytics, said, "Cold and stormy winter weather continued to weigh on the job numbers. Underlying job growth, abstracting from the weather, remains sturdy. Gains are broad based across industries and company sizes, the biggest exception being manufacturing, which shed jobs, but that is not expected to continue."
Ian Shepherdson, chief economist at Pantheon Macroeconomics, says despite the slowdown in the ADP series, he is not too concerned.
"This is a clear slowing from December's 227,000 but we are not too concerned," writes Shepherdson in a note following the release.
"We reckon about half the downshift is real, captured in the drop in the ISM manufacturing jobs index, at least some of which is weather-related. The other half likely reflects technical factors. The headline ADP number is generated by a model, of which the key component is the actual survey of people employed by firms using ADP's payroll services, but it also includes lagged official data. The December BLS number was very weak, and that has fed into the January ADP. We think it likely the BLS number for January will overshoot ADP, and we are still looking for private payrolls to rebound about 225,000, recovering some of the lost December ground."
S&P 500 futures have continued drifting lower in the wake of the release, while Treasury futures continue to head higher.
Now, all eyes are on the release of the Institute for Supply Management's monthly survey of services-sector firms, due out at 10 AM ET — and in particular, what it has to say about employment.
"We would pay much closer attention to ISM Non-Manufacturing headline and the employment sub-series," says Bryan Zarnett, a strategist at Citi.
"With U.S. data continuing to surprise to the upside and market expectations of Fed tightening being brought forward, this morning's ADP print may initially cause some volatility in fixed income and FX markets. However, we believe that ISM is much more important in supporting our long-term USD positive view."
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