The January ADP survey of private employers surprised on the upside, saying non-government jobs grew 130k this month. Consensus had been looking for +40k.
The growth in new jobs in the ADP survey was focused on services, which added 141k new jobs in January. Goods producing jobs declined 11k, continuing a 14 month string of negative job growth in this category. Construction employment fell by 13k, also the fourteenth straight monthly drop. Since the peak in 2006, over 200k construction jobs have been eliminated. A bright spot is that manufacturing job growth was steady after falling for 18 months in a row. Also, financial jobs showed a small rebound, growing by 1k.
Most of the job growth was also found in companies employing less than 500 people, which added 122k new jobs. Larger employers only added 8k new jobs.
Government jobs have been growing between 20-35k monthly, so this data implies non-farm payroll growth on Friday of 150-165k. This is substantially higher than the 65k current consensus. Last year, the ADP figures had only a 41% correlation with non-farm payroll results.
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