Labor Market Continues to Tighten

The Bureau of Labor Statistics’ latest official employment report shows that businesses added 227,000 workers last month and the unemployment rate rose slightly to 4.8 percent, while the January national employment report from ADP’s Research Institute shows that private-sector employers adding 246, 000 jobs in January. The BLS report beat estimates by economists surveyed prior to its release by Reuters, who’d predicted the report would show a gain of 175,000 jobs.

The BLS and ADP employment reports are based on different methodologies, as CNBC’s Mark Fahey has noted: ADP counts all employees who are listed as active on an employer’s payroll, while the BLS surveys companies to tally employees who are actually paid. The reports differ by 40,000 about half the time, he wrote.

“The U.S. labor market is hitting on all cylinders and we saw small and mid-sized businesses perform exceptionally well,” said ADP Vice President Ahu Yildirmarz, the co-head of the payroll-processing giant’s Research Institute.

That’s not to say everything’s rosy on the employment front: Yesterday, outplacement consultancy Challenger, Gray & Christmas released its monthly jobs-cut report, which shows U.S. companies made nearly 46,000 job cuts in January — up 37 percent from December, when layoffs totaled 33,627.  However, while last month’s tally was the highest since last April (64,141), it’s a year-over-year improvement from January 2016, when employers announced 75,114 job cuts. This January’s job reductions were concentrated  in retail, which accounted for 49 percent of the job cuts, while retail and energy accounted for the much of the cuts in January 2016. Macy’s led the pack last month, announcing plans to close 68 of its stores and reduce its workforce by 10,000 workers.

“Overall, it was a solid holiday shopping season, but several retailers, including Macy’s, were unable to capitalize on stronger consumer confidence and spending,” said John A. Challenger, CEO of Challenger, Gray & Christmas.

ADP’s report, based on payroll data compiled from its 411,000 U.S. clients, shows that mid-sized businesses with between 50 and 499 employees added the most jobs in January (102,000). Large companies with 500 or more employees added 83,000 jobs, while small businesses (those with between 1 and 49 employees) added 62,000 positions.

“2017 got off to a strong start in the job market,” said Mark Zandi, chief economist of Moody’s Analytics, which helps ADP produce the report. “Job growth is solid across most industries and company sizes. Even the energy sector is adding to payrolls again.”

The BLS report finds that January’s robust employment numbers did not lead to increases in workers’ pay, with a year over year increase of 2.5 percent, compared to 2.9 percent in December.  A smaller-scale study,  Glassdoor’s Local Pay Reports — which monitor salaries for approximately 60 job titles across multiple industries — finds that the annual median base pay in the United States grew by 3.2 percent year over year in January to $51,360.

The positive sentiment on jobs is reflected in Gallup’s latest Job Creation Index, which measures U.S. workers’ perceptions of their workplace’s job climate. The JCP’s January score of +34 is the highest in its nine-year history, Gallup reports. That score compares to JCIs of -5 in January and April of 2009, when the country was in the depths of the Great Recession. Gallup bases the JCI on a daily, randomized sample of employed U.S. adults’ perceptions of their workplace’s hiring-and-firing activity.