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By Bob Willis
WASHINGTON - Companies added 170,000 workers in January, reflecting job gains in services and at small businesses, according to a private report based on payrolls.
The increase was less than forecast and followed a revised 292,000 rise the prior month that was less than previously reported, the report from the Roseland, N.J.-based ADP Employer Services showed Feb. 1. The median estimate in a Bloomberg News survey of economists called for an advance of 182,000.
“The job market continues to grow at a moderate pace,” Jonathan Basile, a senior economist at Credit Suisse in New York, said before the report. “We’re on a gradually improving path for the labor market.”
More hiring is needed to spur consumer spending, which accounts for about 70 percent of the world’s largest economy. A Labor Department report in two days may show payrolls last month rose by 145,000 and the unemployment rate held at 8.5 percent, economists in a Bloomberg survey projected.
The projections for the change ADP employment ranged from 145,000 to 300,000, based on the estimates of 40 economists surveyed by Bloomberg.
The slowdown in hiring from the prior month may be explained by the so-called purge effect. Workers, regardless of when they are dismissed or quit, sometimes remain on company records until December, when businesses update, or purge, their figures with ADP.
The paycheck processor estimates this change when adjusting its data for seasonal variations and, because there were fewer firings at the end of 2011 than in previous years, ADP may have found it more difficult to formulate a projection.
“Employment grew in all the major sectors of the economy,” Joel Prakken, senior managing director at Macroeconomic Advisers LLC in St. Louis, which produces the data with ADP, said in a statement. “Other indicators suggest some firming of labor market conditions as well.”