U.S. ADP Employment Growth is Steady and Firm

The labor market turned in another respectable performance last year, according to the ADP/Moody's National Employment Report. Private sector payroll employment grew 2.1% in 2014 and annual increases have ranged between 1.8% and 2.3% for the last four years. During December, payrolls grew 241,000 (2.2% y/y) following a 227,000 November gain, earlier reported as 208,000. The October increase of 242,000 also was revised up from 233,000. The Action Economics Forecast Survey called for a 224,000 rise during December.

The ADP survey is based on ADP's business payroll transaction system covering 411,000 companies and nearly 24 million employees. The data are processed by Moody's Analytics Inc., then calibrated and aligned with the BLS establishment survey data.

Small business payrolls rose 2.2% last year, about the same as during 2013. In December, a 106,000 rise (2.2% y/y) was near the growth during the prior two months. Jobs in medium-sized firms increased 1.8% in 2014, also on a par with earlier years. The 70,000 increase last month (2.2% y/y), was the weakest gain of the last three months. The 2.4% y/y rise in large business payrolls also was near the gains since the end of the recession. A 66,000 December increase (2.2% y/y), however, was near the high end of the monthly gains during last year.

Construction sector hiring turned in another strong year which led other sectors. A 3.8% annual gain roughly matched 2013 and was the strongest of the recovery. The 23,000 increase last month (4.0% y/y) continued the firm growth of earlier months. Hiring in the factory sector eased a bit last year as the 96,000 improvement (0.8% y/y) was near the low end of growth since 2011. The 26,000 December (0.8% y/y) increase, however, continued the strengthening of monthly gains during the last year.

Service-providing payrolls grew a steady 2.1% last year, as they have since late-2011. Industry growth varied. Professional & business services jobs grew 596,000 (3.2% y/y) last year, on a par with the prior three years. Last month's 69,000 increase (3.4% y/y), however, was the strongest in six months. Trade, transportation and utilities added 508,000 jobs (2.0%) during all of last year and that was the firmest gain of the recovery. These payrolls rose 44,000 (1.8% y/y) last month. Financial activities jobs increased a moderate 54,000 (0.7% y/y) during all of last year. The 15,000 December increase (1.0% y/y) was the strongest in roughly two years.

The ADP National Employment Report data are maintained in Haver's USECON database; historical figures date back to April 2001. The figures in this report cover jobs only in the private sector. The expectation figure is available in Haver's AS1REPNA database.