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Private sector jobs growth slowed somewhat in January with small gains in the financial services sector, according to the ADP National Employment Report.
Automatic Data Processing Inc. said nonfarm private payrolls increased by 170,000 on a seasonally adjusted basis in the first month of 2012. The company also revised December's gain down to 292,000 from an initial 325,000.
The payroll giant conducts the monthly survey, which excludes federal jobs, in conjunction with Macroeconomic Advisers.
Service sector jobs rose by 152,000 in January and the financial sector added 9,000 jobs last month, which is the largest gain in two years.
Carlos Rodriguez, president and CEO of ADP, said the private sector averaged jobs growth of 223,000 the past three months compared with 163,000 for all of 2011.
"Labor market conditions continue to improve at a moderate pace," said Joel Prakken, chairman of Macroeconomic Advisers. "Today's report marks the 24th consecutive monthly gain in private employment."
Prakken said employment gains are consistent with the recent acceleration of GDP, which rose at a rate of 2.8% in the fourth quarter.
Analysts surveyed by Econoday expected 172,000 new private-sector jobs in January with a range of estimates from 110,000 to 235,000.
Paul Ashworth, chief U.S. economist at Capital Economics, said the January tally suggests more modest gains than the December ADP figure.
"We're not overly concerned, however, since the ADP survey has a habit of vastly over-estimating employment growth in the final month of each year because of seasonal adjustment problems," Ashworth said.
"Allowing for a 20,000 drop in public sector employment, the 170,000 ADP increase supports our forecast that the official nonfarm payroll figures will show a 150,000 gain," he said.
On Friday, the Labor Department reports nonfarm payroll data for the first month of 2012.
TrimTabs Investment Research said the economy added a disappointing 45,000 jobs last month, which is the second lowest total since September 2010.
Madeline Schnapp, director of macroeconomic research at the Sausalito, Calif., firm, said "it appears that the economy has hit stall speed due to lackluster demand and a deleveraging consumer who would rather save than spend."
"We see nothing on the horizon to knock the economy out of its slow growth mode," Schnapp said. "The economy faces substantial headwinds from negative real wage and salary growth, high unemployment, waning government support, expiring tax incentives, contracting state and local governments, elevated fuel prices, and a sluggish housing market."
Write to Jason Philyaw.
Follow him on Twitter: @jrphilyaw.
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