January ADP Report Shows Private Sector Job Creation Weakening

According to payroll processor ADP, U.S. private sector job creation added 213,000 jobs in January, solidly below the 225,000 increase economists expected.

Midsize businesses, those with between 50 to 499 employees, led the way adding 95,000 jobs in the private sector. Employment among these companies was the only segment that showed an increase in January. Employment at large companies – those with 500 or more employees – decreased from 61,000 the previous month to 40,000 jobs added in January. However, payrolls for small businesses with 49 or fewer employees increased by 78,000 jobs in January, down from 115,000 in December.

“Employment posted another solid gain in January, although the pace of growth is slower than in recent months,” said Mark Zandi, chief economist of Moody’s Analytics. “Businesses in the energy and supplying industries are already scaling back payrolls in reaction to the collapse in oil prices, while industries benefiting from the lower prices have been slower to increase their hiring. All indications are that the job market will continue to improve in 2015.”

Yet, sector-by-sector data continue to show job creation in low-paying positions far exceeding higher wage opportunities.

The construction industry added just 18,000 jobs, down from last month’s gain of 26,000, while manufacturing added 14,000 jobs in January, far below December’s 23,000. Goods-producing employment rose by 31,000 jobs in January, down from 47,000 jobs gained in December.

Service sector employment, a typical low-pay industry, increased by 183,000 jobs in January, down from 207,000 in December. The ADP National Employment Report found professional/business services contributed just 42,000 jobs in January, a large drop-off from the 72,000 seen in December. Expansion in trade/transportation/utilities grew by 54,000, a sharp increase from December’s 40,000. The 11,000 new jobs added in financial activities is down from last month’s 14,000.