Job creation in the private sector plunged in January as weather-related issues sent workers to the sidelines, payroll processing firm ADP reported Wednesday.
Companies added just 106,000 new workers for the month, down from an upwardly revised 253,000 the month before. Economists surveyed by Dow Jones had been looking for a gain of 190,000.
Most of the growth came in the hospitality industry, as bars, restaurants, hotels and the like added 95,000 positions. Other growth industries included financial activities (30,000), manufacturing (23,000), and education and health services (12,000).
However, the trade, transportation and utilities sector lost 41,000, construction was off 24,000, and natural resources and mining declined by 3,000.
In all, goods-producing industries saw a net loss of 3,000 jobs, while service providers added 119,000.
Pay growth was little changed for the month, but up 7.3% from a year ago.
Despite the low headline number, ADP’s chief economist, Nela Richardson, said weather factors were at play and job growth may not have been as weak as the number indicates.
Heavy rainfall hit New Jersey’s Edgewater and caused flooding on Monday, in New Jersey, United States on January 23, 2023.
Fatih Aktas | Anadolu Agency | Getty Images
“In January, we saw the impact of weather-related disruptions on employment during our reference week,” Richardson said. “Hiring was stronger during other weeks of the month, in line with the strength we saw late last year.”
Like the Bureau of Labor Statistics, ADP uses the week of the 12th for its payroll sampling. The firm noted that extreme weather events, including snowstorms in the Midwest and floods in California, impacted the jobs picture.
The Midwest region saw a decline of 40,000 jobs, while the Pacific Rim lost 4,000, according to ADP.
Companies with fewer than 50 employees struggled the most during the period, down 75,000 workers. Big firms employing 500 or more workers added 128,000.
The numbers come with the Federal Reserve trying to slow the economy through a series of interest rate hikes specifically aimed at bringing down inflation.
The report also comes two days before the more closely watched BLS count of nonfarm payroll growth for the month. Economists surveyed by Dow Jones expect to see growth of 187,000 in that report.