U.S. private sector employment continued the momentum in the first month of 2012, bringing positive hope for labor market recovery in the new year, said the National Employment Report released Wednesday by Automatic Data Processing, Inc. (ADP).
The ADP said that the private sector added 170,000 jobs from December to January on a seasonally adjusted basis, fewer than forecast.
The small businesses and medium businesses accounted for the majority of the employment gains last month, adding 167,000 jobs in total, while large businesses increased only 3,000 jobs.
The employment in the service-providing sector rose by 152,000 in January, down from an increase of 273,000 in December. Jobs in the goods-producing sector only added 18,000, while manufacturing employment increased 10,000, according to the report.
Economists said that the slowdown in hiring last month may be explained by the purge effect. Workers, regardless of when they are dismissed or quit, sometimes remain on company records until December, when businesses purge, or update the figures.
While there is more evidence for an improving labor market, few believe it will return to a normal level in the short term due to relatively weak economic growth.
The ADP National Employment Report, created by Automatic Data Processing, Inc., in partnership with Macroeconomic Advisers, LLC, is derived from actual payroll data and measures the change in total nonfarm private employment each month.