U.S. private payrolls rose by 174,000 in January, beating expectations: ADP

U.S. private employers added back far more jobs than expected in January, returning to growth even as the coronavirus pandemic and winter weather exerted pressure on hiring.

Private payrolls increased by 174,000 in January, ADP said in its closely watched monthly jobs report on Wednesday. This compared to consensus estimates for a rise of 70,000, according to Bloomberg data. The U.S. economy had shed 74,000 private payrolls in December for its first decline since April, based on ADP’s revised print.

The service-providing sector rebounded strongly at the start of the year, increasing payrolls by 156,000. That was led by a jump of 56,000 payrolls in education and health-services industries, along with a rise of 40,000 jobs in business services. Leisure and hospitality positions rose by 35,000.

The result marked a notable reversal after a dive in service sector employment in December, when high-contact industries came under considerable pressure as renewed lockdown restrictions wiped out business. Private service-providing jobs dipped by about 100,000 in December, according to ADP. And the losses were even more staggering in the U.S. Labor Department’s report on non-farm payrolls, which showed a loss of nearly 500,000 leisure and hospitality jobs in December alone.

The latest ADP payrolls report precedes the Labor Department payrolls January report by two days, but has been an unreliable predictor of the results in the government report over the course of the pandemic due to differences in survey methodology. With the ADP report, only individuals on an active payroll are counted as employed, while the Labor Department counts any individual that received a paycheck during the survey week for the report.

As of Wednesday morning, consensus economists anticipated the government report would show net non-farm payroll gains of 70,000, following a drop of 140,000 in December. This would include an increase of 105,000 private payrolls, after a decline of 95,000 at the end of last year.

NEW YORK, NEW YORK - DECEMBER 01: Sale signs are displayed in the window of a business in Brooklyn on December 01, 2020 in New York City. Businesses continue to struggle as unemployment remains high and more shoppers have migrated to online shopping. New York City, and much of the nation, is bracing for a surge of COVID-19 cases following the Thanksgiving holiday which saw millions of Americans travel to see family and friends. According to the COVID Tracking Project, a record-high of 96,039 COVID-19 patients were hospitalized in the US as of Monday.  (Photo by Spencer Platt/Getty Images)
NEW YORK, NEW YORK - DECEMBER 01: Sale signs are displayed in the window of a business in Brooklyn on December 01, 2020 in New York City. (Photo by Spencer Platt/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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