Automatic Data Processing (ADP) said that manufacturing employment contracted by 12,000 workers on net in January, the first decline since July. Indeed, January’s decrease follows an increase in hiring of 56,000 net new employees between August and December, mirroring the stronger growth in demand and output seen in other measures. Poor weather conditions might have been a factor, negatively impacting production and consumer spending.
On a year-over-year basis, manufacturers added just 31,000 net new workers since January 2013, with weaknesses in the first half of the year dragging this figure lower.
Meanwhile, ADP reported that 175,000 net new nonfarm payroll workers were generated in January, a figure that was mostly in-line with consensus expectations. Service-providing firms added 160,000 workers in the month, with goods-producing businesses creating 16,000. Small and medium-sized businesses (e.g., those with less than 500 employees) contributed over 80 percent of the net new jobs. Professional and business services (up 49,000); trade, transportation and utilities (up 30,000); and construction (up 25,000) had the largest increases in January, with financial services employment unchanged.
The Bureau of Labor Statistics will release official jobs numbers on Friday, and the expectation is for nonfarm payrolls to be similar to what ADP reported. Manufacturers had averaged 16,000 additional employees each month from August to December, but January’s number should reflect some of the weather-related softness we see in recent data, including today’s ADP report.
Chad Moutray is the chief economist, National Association of Manufacturers.