Private Payroll Growth Continued to Moderate in January, ADP Reports
Treasury yields retreated along with the U.S. Dollar while equity markets dipped following a much weaker-than-expected jobs report from ADP on Wednesday.
The huge miss in the private sector jobs market comes shortly before a widely expected U.S. Federal Reserve 25-basis point rate hike at 19:00 GMT.
Private Payroll Growth Slowed
The U.S. private sector labor market fell in January, with companies adding fewer jobs due to weather-related issues, according to payroll processing firm ADP.
Private sector payrolls rose by just 106,000 for the month, down from an upwardly revised 253,000 the month before. Economists surveyed by Dow Jones had been anticipating a gain of 190,000.
The details of the report reveal that most of the growth came in the hospitality industry, as bars, restaurants, hotels and the like added 95,000 positions. Other growth industries included financial activities (30,000), manufacturing (23,000) and education and health services (12,000).
Additionally, ADP reported that annual pay growth was little changed for the month, but up 7.3% from a year ago.
What Does Mean?
“In January, we saw the impact of weather-related disruptions on employment during our reference week,” Richardson said. “Hiring was stronger during other weeks of the month, in line with the strengthen we saw late last year.”
Looking Ahead to Friday’s NFP Report
The ADP report comes two days before the Labor Department’s count, which is expected to show growth of 187,000 in nonfarm jobs and an unemployment rate rising slightly to 3.6%. Nonfarm payrolls rose by 223,000 in December.
For a look at all of today’s economic events, check out our economic calendar.