Private payroll company ADP reported that US jobs grew the least since January of 2021 with 106,000 private payrolls in January 2023. The addition of jobs was much lower than the consensus 170,000 and lower than December’s 235,000 new jobs. The tight labor market, rising interest rates and elevated inflation are the main catalysts for weakness. The slowdown in jobs was led trade/transportations and utilities losing 41K jobs. The goods-producing industry lost 3K jobs due to construction (-24K) and mining (-2K) while the manufacturing sector added 23K. The US Labor Department will report its jobs report on Friday.
ADP US January 2023 Employment Report
Job growth was concentrated in the services sector adding 109K jobs, led by leisure and hospitality (95K), financial activities (30K), education/health services (12K), professional/business (8K) and information (5K) while trade/transportations and utilities lost 41K jobs according to ADP.
“Employment was soft during our Jan. 12 reference week as the U.S. was hit with extreme weather. California was coping with record floods and back-to-back storms delivered ice and snow to the central and eastern U.S.”
Nela Richardson Chief Economist, ADP
Total U.S. Nonfarm Private Employment: 106,000
By Company Size
Small establishments: -75,000
o 1-19 employees -70,000
o 20-49 employees -5,000
Medium establishments: 64,000
o 50-249 employees 99,000
o 250-499 employees -35,000
Large establishments: +128,000
o 500+ employees 128,000
“In January, we saw the impact of weather-related disruptions on employment during our reference week. Hiring was stronger during other weeks of the month, in line with the strength we saw late last year.“
Nela Richardson Chief Economist, ADP
Change by Industry Sector
Goods-producing: -3,000
o Natural resources/mining -2,000
o Construction -24,000
o Manufacturing +23,000
Service-providing: 113,000
o Trade/transportation/utilities -41,000
o Information +5,000
o Financial activities +30,000
o Professional/business services +8,000
o Education/health services +12,000
o Leisure/hospitality +95,000
o Other services 0
PAY INSIGHTS
Pay gains moderated again in January
Pay growth for job stayers held at 7.3 percent for the second month, with most industries little changed. One outlier was the information sector, where pay growth decelerated from 7 percent to 6.6 percent. For job changers, pay growth accelerated to 15.4 percent.
Median Change in Annual Pay (ADP matched person sample)
Job-Stayers 7.3%
Job-Changers 15.4%
The ADP count comes two days ahead of the government’s nonfarm payrolls report, which includes government jobs that ADP does not count.
The Fed Chair Powell came out with a more hawkish tone as expected at the last FOMC. Federal Reserve President Powell and other Fed Governors have admitted they are unsure of the path for wages and inflation. The wages data gives us indications of the FOMC plans on rates into 2022.
Estimates for BLS report
The Labor Department is set to release its November jobs report Friday at 8:30 a.m. ET. Here are the main metrics expected:
- Economists forecast the U.S. added jobs last month, down from
- Average hourly earnings gains are expected to hold at
- Headline unemployment rate is forecast to tick lower, to a multi-decade trough of around
About the ADP® National Employment Report™
The ADP® National Employment Report™ is a monthly measure of the change in total U.S. nonfarm private employment derived from actual, anonymous payroll data of client companies served by ADP®, a leading provider of human capital management solutions. The report, which measures nearly 26 million U.S. workers, is produced by the ADP Research Institute®, a specialized group within the company that provides insights around employment trends and workforce strategy, in collaboration with Moody’s Analytics, Inc.
Each month, ADP Research Institute issues the ADP National Employment Report as part of the company’s commitment to adding deeper insights into the U.S. labor market and providing businesses, governments and others with a source of credible and valuable information. The ADP National Employment Report is broadly distributed to the public each month, free of charge.
The data for this report is collected for pay periods that can be interpolated to include the week of the 12th of each month and processed with statistical methodologies similar to those used by the U.S. Bureau of Labor Statistics to compute employment from its monthly survey of establishments. Due to this processing, this subset is modified to make it indicative of national employment levels; therefore, the resulting employment changes computed for the ADP National Employment Report are not representative of changes in ADP’s total base of U.S. business clients.
Source: ADP, TradersCommunity Data, BLS
From The TradersCommunity News Desk