U.S. private hiring rebounds solidly in January

FILE PHOTO: Job seekers line up at a job fair of an oil services giant Halliburton at the MCM Grande Fundome hotel in Odessa, Texas, U.S., July 19, 2018. Picture taken on July 19, 2018. REUTERS/Liz Hampton

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. private payrolls rebounded more than expected in January, suggesting the labor market recovery was back on track after the economy shed jobs in December as soaring COVID-19 infections hurt operations in the leisure and hospitality industry.

The ADP National Employment Report on Wednesday showed broad gains in hiring last month, though the pace was half of the monthly average job growth in the last six months of 2020. The stronger-than-expected rise in hiring was likely driven by the nearly $900 billion in additional pandemic relief provided by the government in late December.

“Recovery in payrolls is ongoing, albeit at a slow pace,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. “However, contact-facing businesses continue to face downside risks from virus-related restrictions.”

Private payrolls increased by 174,000 jobs last month after dropping by 78,000 in December. Economists polled by Reuters had forecast private payrolls would rebound by 49,000 in January.

The ADP report is jointly developed with Moody’s Analytics.

Goods producers added 19,000 jobs in January, with employment in the construction industry rising 18,000. Manufacturing payrolls gained only 1,000. Hiring in the services sector rebounded by 156,000 jobs after falling 73,000 in December. The leisure and hospitality industry added 35,000 jobs after shedding 79,000 positions in December.

January was the worst month of the coronavirus pandemic since it started in the United States, according to data from Johns Hopkins University, forcing consumers to hunker down.

The bounce back in hiring last month as authorities started to ease restrictions on businesses has offered hope of faster job growth in the months ahead as the boost from recent stimulus package fully kicks in and the vaccines rollout speeds up.

“The rebounds suggest that demand rebounded quickly once the latest coronavirus wave passed its peak,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

U.S. stocks opened higher after strong quarterly results from Alphabet and Amazon, and hopes of more stimulus. The dollar was steady against a basket of currencies. U.S. Treasury prices were lower.


President Joe Biden has unveiled a recovery plan worth $1.9 trillion, though resistance from some lawmakers worried about the ballooning national debt could see the package trimmed. The Biden administration has pledged to speed up and simplify the distribution of vaccines.

Moody’s Analytics chief economist Mark Zandi said vaccines and fiscal stimulus could help to spur faster job growth.

The ADP report was published ahead of the government’s closely watched, and comprehensive, monthly employment report on Friday. Despite the solid ADP number, economists did not change their estimates for January nonfarm payrolls, noting its spotty record predicting the private payrolls count in the government’s employment report.

“We don’t think that the ADP report gives a very reliable signal about the Labor Department data,” said Daniel Silver, an economist at JPMorgan in New York.

According to a Reuters poll of economists payrolls likely increased by 50,000 jobs in January after declining by 140,000 in December, the first drop in employment in eight months.

Expectations for a rebound in hiring were bolstered by a report on Monday from the Institute for Supply Management showing that manufacturers hired more workers in January, though a flare-up in COVID-19 infections caused labor shortages at factories and their suppliers.

But the Conference Board’s survey last week showed consumers’ perceptions of labor market conditions deteriorated further in January.

The economy has recouped 12.5 million of the 22.2 million jobs lost in March and April. The Congressional Budget Office estimated on Monday that employment would not return to its pre-pandemic level before 2024.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)

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