Private sector added 187,000 jobs in January
The private sector added 187,000 jobs in January, led mostly by gains in small business, especially in the service industry, according to the ADP National Employment Report. Last month's gain was better than analysts' estimates but slower than December's revised increase of 247,000. Initially Automatic Data Processing Inc. reported the private sector added 297,000 jobs in the last month of 2010. The payroll giant conducts the monthly survey, which excludes federal jobs, in conjunction with Macroeconomic Advisers. Analysts surveyed by Briefing.com expected jobs growth of 150,000 in January, while a Dow Jones survey projected 143,000 new private sector jobs and a Bloomberg poll produced a consensus estimate of 140,000. Gary Butler, president and chief executive of ADP, said private-sector employment rose for 12 consecutive months, and "positive trends in ADP's key business metrics through December 2010 also reflect a strengthening labor market." And Joel Prakken, chairman of Macroeconomic Advisers, said "the recent pattern of rising employment gains since the middle of last year appears to be intact." But one economist wonders what kind of gauge the ADP figures are in relation to the federal nonfarm payroll data coming later this week. "The question is can this survey be trusted to give us an accurate steer on the official nonfarm payrolls, data released this Friday, or is it crying wolf again?" Capital Economics Chief US Economist Paul Ashworth said. His Toronto-based firm maintains an estimate of an increase of 125,000 in nonfarm payrolls for January because the prior month's ADP figures varied significantly from the Labor Department's Bureau of Labor Statistics data. In early January, the government reported the economy added 103,000 jobs in December, which was well below most estimates. Madeline Schnapp, director of macroeconomic research at TrimTabs, said some "very bullish" indicators for January data prompts her to "expect the job growth reported by the BLS to surprise to the upside." Schnapp said some factors that led to her "guesstimate" include unemployment claims that have been trending lower since August and a 4.5% rise in her firm's online job postings index in January. An increase in commercial and industrial loan activity also bodes well for jobs growth, according to Schnapp, but overall economic recovery is hindered by numerous issues. "While accelerating job growth is positive, the economy is still very much on government life support," she said. "Trillions of dollars in freshly printed and borrowed money are boosting stock prices and stimulating income and job growth. Our two biggest longer-term concerns are whether the economy will be able to grow without extraordinary government support and whether there are sufficient buyers of U.S. Treasuries at low yields." Write to Jason Philyaw.