January 13, 2020
Author: Ben Halverson
Organization: Lorman Education Service
2019 ended with a month of robust hiring in the United States. The country gained 202,000 nonfarm private-sector jobs in December 2019 according to the most recent National Employment Report produced by payroll processor ADP. The number represents the largest monthly increase in jobs since April 2019 when the labor market grew by 255,000 jobs.
The strong hiring numbers surpassed economist estimates. MarketWatch reported the job gains greatly exceeded the 157,000 new jobs economists forecast for December in an Econoday poll. December's job gains also were far greater than the 124,000 jobs ADP says the country added during November 2019.
MarketWatch also notes economists predict the Labor Department will report a gain of 160,000 jobs for December 2019. ADP released its December 2019 employment report two days before the Labor Department is expected to distribute its report of December's employment data.
Frequently, the numbers in the two reports differ. The Labor Department reports hiring numbers from the private sector and the government. The ADP report excludes government job gains. Neither report includes farm jobs.
Hiring by Business Size
Businesses of all sizes expanded their payrolls. Midsized businesses, those that have 50 to 499 employees, added the most jobs with 88,000 new hires. Small businesses, operations with 1 to 49 employees, followed by added 69,000 new workers. Large companies with 500 or more employees had the least gains. Large businesses added 45,000 workers.
Job Growth by Industry
Both the service sector and the goods-producing sector had net gains in December. Most industries within those sectors experienced job growth. Yet, hiring within the service sector's industries led the labor market's growth.
The Service-Providing Sector
The industries within the service sector had a net gain of 173,000 jobs. Trade, transportation, and utilities were combined in ADP's report and had the highest gains with 78,000 new jobs. Professional and business services added 61,000 jobs. Health care and social assistance added 46,000 workers. Education grew by 3,000 jobs. Financial activities saw an increase of 10,000 jobs. Services classified as "other" added 10,000 jobs.
However, the service sector did not realize gains in every industry. Information loss 14,000 jobs while jobs in leisure and hospitality dropped by 21,000.
The Goods-Producing Sector
The construction industry's growth offset losses by the other industries in this sector. Construction gained 37,000 jobs. The goods-producing sector had a net gain of 29,00 jobs due to 8,000 job losses in manufacturing, natural resources, and mining.
Unemployment Remains Low for Now
The unemployment rate dipped to a 50-year low of 3.5 percent in September 2019. Since then, the rate has stayed around that extremely low level according to the Bureau of Labor Statistics.
Mark Zandi is chief economist at Moody Analytics, which works with ADP to create the employment report. Based on his observations about job trends over the last few months, Zandi warns it's possible for the country to see an increase in unemployment soon.
"Looking through the monthly vagaries of the data, job gains continue to moderate. Unemployment is low, but will begin to rise if job growth slows much further," said Zandi. The economist also expressed particular concern about continued job losses in manufacturing and energy.
About ADP's National Employment Report
ADP Research Institute partners with researchers at Moody Analytics to develop the National Employment Report. The report marks the change in the number of nonfarm, non-government jobs each month on a seasonally-adjusted basis. Rather than collecting information from surveys, the researchers use data gleaned from the ADP payroll transactions of the company's 411,000 U.S. clients who have approximately 24 million workers. ADP began issuing the National Employment Report in 2006.
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