Wednesday, ADP said that 174,000 jobs were created in the first month of 2021, handily beating expectations; consensus forecasts were calling for job growth of around 48,000.
The latest employment data was also a substantial jump from December’s revised decline of 78,000 jobs.
Employment data has been fairly volatile the last few months. Although January’s data were better than expected, economists have noted that the labor market continues to feel the effects of the COVID-19 pandemic. Last week Federal Reserve Chair Jerome Powell noted that there are still 9 million people who are out of work as a result of the pandemic.
Some economists have noted that the latest private sectors data provides some downside risks ahead of Friday’s non-farm payrolls report. However, they also note that ADP is not a consistent predictor of the government’s official numbers.
Andrew Grantham, senior economist at CIBC, said that volatility in the labor market could be impacting the latest economic data.
“The first month of the year is typically a period of job losses before seasonal adjustments are made, including in some areas that were hardest hit by the pandemic such as bars and restaurants,” he said. “With employment lower to begin with there may have been less scope for job losses in such areas, which would have translated into a “gain” following seasonal adjustment. As such, to suggest that the US economy “created” 174K jobs at the height of the pandemic’s second wave could be a little misleading.”
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