Private businesses in the United States added 807,000 jobs in December, the most since May, pointing to a stronger rebound of the labor market, according to a report from ADP on Wednesday.
The increase, which handily beat estimates of about 410,000 new jobs, was broad-based, with the largest gains coming from service-providing industries that added 268,000 more jobs on the month. For goods-producing industries, the number was 34,400.
Such improvement from service providers might be the result of a combination of the shift in consumption from goods to services as the impact of the delta variant subsided, and the seasonal distortion around the holidays. A similar dynamic happened recently with the initial jobless claims number.
Still, with the rapid spread of the omicron variant, there will be more downside risk for service-providing sectors in the coming months. Thousands of flights during the holiday were canceled because of the rapid spread of the omicron variant to flight crews.
Job gains also increased across all firm sizes as the largest firms, or those with more than 1,000 employees, continued to lead the increase with 120,100 new monthly job gains, followed by small firms with less than 50 employees, which added 90,000 on the month.
Because of differences in survey measurements, the ADP job report is not a reliable predictor of the closely followed jobs report from the Bureau of Labor Statistics, which will be released on Friday. In November, for example, ADP reported an increase of 504,900 jobs, but the BLS recorded 210,000 new jobs.
Still, there is a reason to believe that the upside surprise from the ADP report is indicating a stronger rebound of the labor market if one looks back at what happened last summer when the payroll number of ADP peaked in May, two months before the BLS’s report did in July.
We expect the economy to add 475,000 jobs in December in Friday’s jobs report, while the same number for November will most likely be revised upward from the initial estimate of 210,000.
