U.S. businesses added 174,000 jobs in January, bouncing back from a 78,000 drop in December and beating economists’ forecasts, according to data released Wednesday (Feb. 3) by payroll processor ADP.
Economists predominantly anticipated the addition of 50,000 jobs in January after a loss of 140,000 in December, per multiple reports. ADP’s National Employment Report, produced in collaboration with Moody’s Analytics, is released before the Labor Department’s monthly jobs report each Friday but is not a sneak-peek at the official federal data.
“The labor market continues its slow recovery amid COVID-19 headwinds,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Although job losses were previously concentrated among small and midsized businesses, we are now seeing signs of the prolonged impact of the pandemic on large companies as well.”
The data was gleaned from 460,000 companies employing almost 26 million workers. The December total of jobs added was revised from a decline of 123,000 to 78,000.
The majority of jobs added in January — 156,000 — were in the services sector. The hard-hit leisure and hospitality industry added 35,000 jobs, whereas education and health gained 56,000. The professional and business services sector added 40,000 workers, and the manufacturing vertical added 19,000 jobs with 18,000 in the construction industry.
Medium-sized businesses — those with 50 to 499 employees — created the most jobs in January with 84,000. Small businesses added 51,000 jobs, and larger firms created 39,000.
A Congressional Budget Office report on Monday (Feb. 1) indicated that it could take years for the U.S. economy and jobs market to bounce back from the COVID-19 pandemic. The agency projected that the unemployment rate will only gradually decline through 2026, with the number of people employed returning to a pre-COVID crisis level only in 2024.
Last month’s ADP report indicated the previous month’s job losses were mostly in retail and leisure and hospitality. On the plus side, a record 52 cities, counties and states will see higher minimum wages this year. December marked the first decline since April 2020.