NEW YORK (Reuters) - U.S. private employers added 175,000 jobs in January, the smallest gain since August as wintry weather kept a lid on hiring, a report by a payrolls processor showed on Wednesday.
Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 180,000 jobs, with estimates ranging from a low of 125,000 to a high of 210,000.
December’s increase in jobs was revised down to 227,000 from the initially reported 238,000. The report is jointly developed with Moody’s Analytics.
Small businesses, defined as having fewer than 50 employees, showed the largest growth by business size, with 75,000 jobs added. Medium businesses, with between 50 and 499 workers, added 66,000, while large companies, with more than 500 staff members, added 34,000 positions, the report showed.
By sector, the services sector added 160,000 jobs, down from an upwardly revised 177,000 in December, led by strength in the professional and business services group, which added 49,000.
Goods-producing companies added just 16,000 positions after an increase of 50,000 the month before. Manufacturers cut jobs, with a decline of 12,000 after adding 16,000 positions in December.
“Cold and stormy winter weather continued to weigh on the job numbers,” Moody’s Analytics Chief Economist Mark Zandi said in a statement accompanying the report. “Underlying job growth, abstracting from the weather, remains sturdy. Gains are broad based across industries and company sizes, the biggest exception being manufacturing, which shed jobs, but that is not expected to continue.”
The ADP report comes two days ahead of the government’s nonfarm payroll report, a measure of the labor market that is more comprehensive and includes both public- and private-sector employment.
December’s initial reading from ADP failed to foreshadow accurately the Labor Department’s report, which showed that just 74,000 jobs were created in December. That was the lowest job creation total in nearly three years, but was largely blamed on the month’s bout of freezing weather across the country.
This time around, analysts are looking for the government data to show that 185,000 jobs were created in January. The entire increase is expected to be in the private sector; the private payrolls forecast is also 185,000, according to a Reuters survey.
“The outcome is a touch lower than expected but still above our expectations for private payrolls to run at around 155,000,” Annalisa Piazza, fixed income strategist at Newedge, wrote in a comment following the report. “That said, today’s outcome represents the weakest ADP reading since August 2013 and it points in the direction of some moderation of job creation at the turn of the year.”
Financial market reaction was subdued. Standard & Poor’s 500 index e-mini futures briefly added to losses but quickly retraced most of the move. U.S. stocks are expected to open slightly lower.
In the bond markets, the yield on the 10-year U.S. Treasury note dropped about 1 basis point following the release of the ADP data to stand at about 2.61 percent, 2 basis points lower on the day.
The dollar remained slightly lower against a basket of currencies .DXY
Reporting by Dan Burns; Editing by Chizu Nomiyama