WASHINGTON (Reuters) – U.S. private payrolls increased far less than expected in January, blamed on harsh weather in some parts of the country, though labor market conditions remain tight.
Private employment increased by 106,000 jobs last month, the ADP National Employment report showed on Wednesday.
Data for December was revised higher to show 253,000 jobs added instead of 235,000 as previously reported. Economists polled by Reuters had forecast private jobs increasing 178,000.
ADP attributed the below-expectations private payrolls gain to bad weather in mid-January, including flooding in California and snowstorms across the Midwest and Northeast.
The goods producing industry lost 3,000 jobs last month, with construction shedding 24,000 positions. But manufacturing added 23,000 jobs. Employment in the vast services sector increased by 109,000 jobs, with leisure/hospitality adding 95,000 positions.
“The muted increase in the ADP measure of private payroll employment will add to fears that the malaise in activity has spread to the labor market,” said Paul Ashworth, chief North America economist at Capital Economics in Toronto. “We would still urge caution about relying too much on the ADP measure, particularly in January when firms purge payroll records of employees who may not have worked for months.”
The ADP report, jointly developed with the Stanford Digital Economy Lab, was published ahead of the Labor Department’s Bureau of Labor Statistics’ more comprehensive and closely watched employment report for January on Friday. It has been a poor predictor of private payrolls in the BLS employment report.
“We caution against extrapolating,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. “Overall, the BLS data show the economy continues to create jobs at a strong pace, and the labor market is showing only gradual signs of softening despite a rapid increase in interest rates.”
According to a Reuters survey of economists, nonfarm payrolls likely increased by 185,000 jobs in January after rising by 223,000 in December.
The Fed is expected to raise its policy rate by 25 basis points on Wednesday. The U.S. central bank last year hiked this rate by 425 basis points from near zero to a 4.25%-4.50% range, the highest since late 2007.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
