US private sector adds more jobs than expected in January - ADP

Private sector employment in the US rose more than expected in January despite the longest government shutdown in history, according to data released by the ADP on Wednesday.

Employers added 213,000 jobs this month versus expectations for a 178,000 increase. Meanwhile, December's rise was revised down to 263,000 from 271,000.

Small businesses with fewer than 50 employees added 63,000 jobs, while medium-sized businesses with between 50 and 499 employees created an extra 84,000 jobs. Large companies with 500 or more employees recruited an extra 66,000 people.

The goods-producing sector created 68,000 jobs, while the services sector added 145,000 jobs, with the biggest contribution coming from professional/business services.

Mark Zandi, chief economist at Moody’s Analytics, said: "The job market weathered the government shutdown well. Despite the severe disruptions, businesses continued to add aggressively to their payrolls. As long as businesses hire strongly the economic expansion will continue on."

Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said the labour market has continued its pattern of strong growth with little sign of a slowdown in sight.

"We saw significant growth in nearly all industries, with manufacturing adding the most jobs in more than four years. Mid-sized businesses continue to lead job creation, however the share of jobs was spread a bit more evenly across all company sizes this month."

Andrew Hunter, senior US economist at Capital Economics, said the strong private payrolls suggest little wider impact from government shutdown.

"And with the BLS confirming that the unpaid Federal government employees were still counted as employed, we continue to expect the official non-farm payrolls figures to show a healthy 190,000 gain (data due on Friday).

"The job gains in January were fairly broad based, with construction, manufacturing, professional & business services and education & health all seeing solid growth. Moreover, this isn’t the only data suggesting that labour market conditions remain unusually strong, with initial jobless claims falling to a 49-year low in late-January.

"The Fed is still likely to emphasise its 'patient' approach following the FOMC meeting concluding later today, suggesting that a March rate hike is off the table. But with financial conditions easing and strong jobs growth likely to keep downward pressure on the unemployment rate, we still think the Fed will hike rates once more this year, probably at the late-April/early-May meeting."