Private sector employment statistics beat analysts' expectations


Private sector employment statistics beat analysts expectations
Private sector employment statistics beat analysts expectations

Employers throughout the country may have even more reason to believe the economy is headed in the right direction, with the most recent ADP Employment Report showing the private sector added more jobs last month than many economists had anticipated. 

According to the report, private sector employment rose by 198,000 in February, while the gain from December to January was revised up by 23,000 to 215,000. The hiring was led by small businesses, which added 77,000 new employees. Medium-sized businesses, or those with between 50 and 499 people, added 65,000, while large businesses brought on 57,000 new workers. 

"In February 2013, the U.S. private sector added a total of 198,000 new jobs, with most of this job growth occurring in the services sector," said Carlos Rodriguez, president and CEO of ADP. "This growth can be attributed to comparable contributions across all three company size segments."

The services sector added 164,000 last month, while 9,000 manufacturing jobs were added.

Beating the predictions
The numbers came in stronger than the average estimate of economists polled by Reuters, which noted that these experts expected a gain of 170,000 new jobs. The media outlet also pointed out that the construction industry saw strong gains, which was attributed to the improving housing market, while rising home prices added to overall economic growth for the first time since 2005. 

"It feels like underlying job growth continues to improve, and at the current pace, this should be enough to start bringing down unemployment," said Mark Zandi, chief economist at Moody's Analytics, which helps develop the report. "In a really rip-roaring economy, we'd be creating closer to 300,000 jobs a month or a bit north of that. So we're not there yet, but we're moving in the right direction."

According to the news source, this growth came even amid concern over higher taxes and spending cuts from the federal government. Still, Zandi added he believes this could affect hiring sometime down the road. 

Differing views
The ADP report was released two days before official data from the U.S. government is issued, and often, there are discrepancies between the two data sets. According to The Wall Street Journal, the median forecast of economists for official government data, which includes both private and government sector employment, came in at 160,000. Even though ADP's report far surpassed this forecast, the numbers from ADP likely won't change economists' predictions. 

According to Bloomberg, total employment in the goods-producing sector – including both the manufacturing and construction industries – rose by 34,000. Construction, specifically, added 21,000 new jobs, which bodes well for companies such as architecture and design firms, and suggests hiring could continue to pick up during the spring quarter. 

One of the top-hiring companies last month included Chrysler Group LLC, which suggests the auto sector as a whole is continuing to bounce back and hiring is picking up. The company invested $372 million in new factories last month, which helped add 1,250 new jobs. 

All this came as a number of reports showed the economy could be on the verge of major improvement, which could mean more activity for staffing companies and recruiters as demand for employees picks up.