Private Payrolls Expected to Increase in December – Robert Hughes (01/09/2020)

The U.S. economy is estimated to have added 202,000 new private-sector jobs in December, according to the ADP Research Institute (see chart). That addition puts the 12-month average at 162,702. The ADP Research Institute estimates track the Bureau of Labor Statistics labor-market data fairly well when looking at the 12-month average.

The ADP report shows small businesses (under 50 employees) added 69,000 jobs in December while medium-size businesses (50–499 employees) added 88,000 new employees and large firms (500 employees and above) added 45,000 new employees. Among the sector breakdowns, goods-producing industries added 29,000 as a 37,000 increase in construction jobs offset a 7,000 decrease in manufacturing jobs and a loss of 1,000 jobs in natural resource and mining industries. Service-providing industries, which typically account for the majority of employment, added 173,000 jobs. Leading the gains were trade, transportation, and utilities (+78,000), professional and business services (+61,000), and health care and education (+49,000).

The employment report from the Bureau of Labor Statistics is due out on Friday, January 10, and should provide a more comprehensive look at the labor market. Both the ADP and BLS reports are subject to revisions in the future.

Data from both sources show there has been a mild slowdown in job creation over the past several months. The 12-month average has fallen to less than 180,000 from the 210,000–220,000 range it was in as recently as April. The slowdown may reflect normal ebbs and flows in hiring activity, difficulty in finding qualified employees, or increasing caution by employers given the heightened uncertainty regarding trade policy, escalating tariffs, and global economic weakness, or perhaps all three.

Overall, the labor market remains solid, with continued jobs gains, a low unemployment rate, low initial claims for unemployment insurance, and positive consumer sentiment. Continued gains in the labor market suggest that the broader economy will likely continue to expand in the months ahead, extending the current record-long expansion. While uncertainty over trade and monetary policy remains a significant concern, the most likely path is for continued expansion.

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