U.S. Private Payrolls Growth Slowed in January Due to Harsh Weather

The U.S. saw a relatively modest 106,000 additional jobs in January, far lower than expected.

According to the ADP National Employment report, December’s job numbers were also revised upwards to 253,000 from the initial 235,000 estimate, much to the surprise of economists who had forecast an increase of only 178,000.   

ADP ascribed the weaker-than-anticipated private payrolls gain to inclement weather in mid-January, such as flooding in California and snowstorms throughout the Midwest and Northeast. This resulted in a contraction in the goods producing industry, with 3,000 jobs lost, and construction subtracting 24,000 positions.  

Conversely, manufacturing saw a boost of 23,000 jobs, while the services sector was strengthened by a 109,000 job increase and leisure/hospitality adding 95,000 posts. 

The ADP report, collaboratively crafted with the Stanford Digital Economy Lab, came out before the Bureau of Labor Statistics’ (BLS) more extensive and heavily observed January jobs report on Friday. However, it has been a weak predictor of private payrolls compared to the BLS report.   

“We caution against extrapolating,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “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.”