ADP reports fewer job gains than expected

Payroll processor ADP said Thursday that businesses added 153,000 jobs in December in a possible sign the government’s employment report this week will also show modest gains.

Economists surveyed by Bloomberg expected ADP to record 175,000 job gains. The Labor Department on Friday is expected to tally 180,000 additional jobs in the public and private sectors.

ADP attempts to foreshadow the Labor Department’s initial private-sector estimate and tends to reflect similar broad trends but often has differed from it significantly. Historically, the disparity has been more pronounced in December, when some employers served by ADP purge from their payrolls employees no longer with the company, says Jim O’Sullivan, chief economist of High Frequency Economics. Labor, by contrast, doesn’t count workers when they stop getting paid.

At the same time, he says, unusually cold weather may have kept some workers at home and suppressed Labor’s employment totals. ADP counts such workers as employed as long as they’re on the payroll.

Labor’s average monthly job growth has slowed to about 180,000 in 2016 from 229,000 the previous year. Many economists cite the low 4.6% unemployment rate, which has spelled fewer job candidates and slower hiring.

“Job growth remains strong but is slowing,” says Mark Zandi, chief economist at Moody’s Analytics, which helps ADP compile the report.

In December, ADP said small businesses added 18,000 jobs, mid-size ones, 71,000 and large companies, 63,000.

Trade, transportation and utilities led the gains, with 82,000. Professional and business services and leisure and hospitality each added 18,000. Construction companies cut 2,000 jobs, and manufacturers chopped 9,000.

Separately, Labor said Thursday that initial jobless claims, a good barometer of layoffs, fell by 28,000 last week to 235,000, well below the 260,000 economists predicted and near four-decade lows. The four-week average dropped by 5,750 to 256,750.