Ahead of this morning’s report from payroll processor ADP, economists polled by Reuters were predicting the addition of 185,000 jobs to private payrolls. The ADP National Employment Report far exceeded those expectations, reflecting 253,000 jobs added.
“Job growth is rip-roaring,” said Mark Zandi, chief economist of Moody’s Analytics, which produces the report with ADP. “The current pace of job growth is nearly three times the rate necessary to absorb growth in the labor force. Increasingly, businesses’ number one challenge will be a shortage of labor.”
That could mean good news for wage growth, which has shown modest improvement in recent months but lagged in the wake of the recession. Real wages, the buying power of workers’ pay with inflation taken into account, are down 7.4 percent since 2006, according to PayScale’s Real Wage Index.
“Given the strong argument that this labor market is going to get really tight, wage growth should pick up much more meaningfully as we make our way through the year into 2018,” Zandi said in a call to reporters, per Reuters.“Increasingly, businesses’ number one challenge will be a shortage of labor,” said Mark Zandi, chief economist of Moody’s. Click To Tweet
Where the Jobs Are
“Professional and business services had the strongest monthly increase since 2014,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “This may be an indicator of broader strength in the workforce since these services are relied on by many industries.”
The service-providing sector as a whole added 205,000 jobs last month, with gains concentrated in professional/business services (88,000 jobs), trade/transportation/utilities (58,000 jobs), education/health services (54,000 jobs), and financial activities (7,000 jobs). Leisure/hospitality shed 11,000 jobs, while information declined by 8,000 jobs.
It was an unusually strong month on the goods-producing side as well. Construction added 37,000 jobs, while manufacturing grew by 8,000 jobs. Mining added 3,000 jobs last month, continuing its streak of recent gains.
“Mining has been one of the cornerstones of President Donald Trump’s economic agenda, though critics doubt he can fulfill campaign promises to bring jobs back to the industry,” writes Jeff Cox at CNBC.
Tomorrow’s report from the Labor Department is expected to show the addition of 185,000 jobs to non-farm payrolls and an unemployment rate holding steady at 4.4 percent.
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