ADP: Private sector added 106,000 jobs in January, down 55% from December

Feb. 1 (UPI) -- U.S. employers added 55% fewer jobs last month than in December, according to the latest numbers out Wednesday from private payroll processor ADP.

Despite the hiring slowdown, which saw firms add just 106,000 new employees in January, compared with 235,000 in December, ADP said the underlying trend remained strong.

ADP attributed the slowdown to extreme weather during its Jan. 12 reference week which saw floods in California and back-to-back winter storms paralyze central and eastern regions of the country.

''Hiring was stronger during other weeks of the month, in line with the strength we saw late last year,'' said Nela Richardson, ADP's chief economist.

Annual pay growth for job stayers remained flat at 7.3% year-over-year, averaging $57,000, unchanged from December. Workers in the Information sector fared less well, seeing growth in their pay decelerate from 7% to 6.6%.

Pay growth for job changers, however, jumped 15,4% reflecting sharp cost of living rises in essential goods and services such as gasoline and food with inflation running at its highest level in more than three decades.

U.S. inflation closed out 2022 at 6.5% after spiking to 9.1% in early summer.

The bad weather factor is in line with the performance of the different hiring sectors with the payrolls of trade, transportation and utilities firms and construction suffering the biggest hits, down 41,000 and 24,000 respectively.

The headcount reduction in construction effectively canceled out more than half of the jobs the sector added in December.

Other services sectors all added jobs with leisure and hospitality growing its payroll count by 95,000.

ADP's December report characterized the U.S. labor market at 2022's year-end as "strong but fragmented", noting real concern could be the lack of increase in overall wages.

Hiring strength varied sharply by industry and establishment size, ADP chief economist Richardson said at the time

"Business segments that hired aggressively in the first half of 2022 have slowed hiring and in some cases cut jobs in the last month of the year."

Of those responding to the Conference Board, only 12% felt that jobs were hard to get and just 18% expected hiring problems to last.

The outlook for wages, however, was poor.