ADP Says U.S. Economy Shows Strong Resilience Adding 198K Jobs Last Month

Mar 6, 2013

ADP report Feb 2013Two days before the government releases its preliminary job count for February, ADP says the U.S. added 198,000 private sector jobs during the month.

The company, which processes the payrolls for hundreds of thousands of U.S. firms and provides other HR related services, also upped its initial January report from 192,000 to 215,000 new jobs.

The report surprised analysts. A survey of economists by Bloomberg News put the average of their estimates at 170,000. That same survey predicts that the report to be released Friday morning by the U.S. Department of Labor will show 167,000 new jobs last month. (The Labor Department’s report includes government jobs; the ADP report does not.)

A USA Today report puts the estimate for the government report at 155,000. Forbes, meanwhile, reports Barclays estimates the jobs increase to be about 150,000 and that the unemployment rate, now at 7.9%, will decline to 7.8%.

What’s particularly encouraging about ADP’s National Employment Report is that the strong gains came across all industry sectors, at firms large and small, and in the face of tax increases, bad weather, and Congressional dithering over sequestration.

“The job market remains sturdy in the face of significant fiscal headwinds,” said Mark Zandi, chief economist of Moody’s Analytics, which prepares the report for ADP. “Tax increases and government
spending cuts don’t appear to be affecting the job market.”

As is usual, the service sector saw the biggest job growth, adding 164,000 new jobs. The goods producing sector added the balance, with manufacturing and construction growing by 9,000 and 21,000 jobs respectively.

Some of the smallest employers had the most aggressive job growth. Businesses with fewer than 50 employees added 77,000 workers. Those with less than 20 employees added 47,000. That’s been the pattern for months; smaller employers — those with fewer than 500 workers — have been fueling the job growth, while the biggest firms — those with more than 500 workers — have had only modest increases.

In February, says ADP, 57,000 new jobs were added by the large employers. Zandi noted, “Businesses are adding to payrolls more strongly at the start of 2013 with gains across all industries and business sizes.”

While the ADP report is often criticized for not tracking with the Labor Department’s monthly numbers, it regularly does predict the trend. Because it doesn’t include government jobs, and uses actual payroll data, the ADP report will always show different results. Some economists even believe it may be more accurate than the Labor Department report, which relies on surveys that businesses send in.

The Society for Human Resource Management, which conducts its own recruitment survey predicting hiring for the month ahead, and reporting on compensation and hiring difficulties, will release its March forecast tomorrow. SHRM’s LINE report for February predicted hiring for both manufacturing and the service sector would be up.

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