January experienced a slight increase in U.S. private payrolls. This clearly points to sustained labor market strength even with the recent dip in business and consumer confidence which is causing a loss of momentum in the present economy.
The ADP National Employment Report showed strong hiring on Wednesday. This suggests that the labor market has been impacted minimally by the U.S government shutdown which lasted for 35 days. Contracts related to buying existing homes also experienced a drop and went to a 4 ½ year low last month. This has led to growing concerns about the outlook of the present economy. The Federal Reserve kept interest rates steady on Wednesday and stated that they would be patient about lifting borrowing costs later this year.
The labor market seems to be in solid shape despite the significant weakening in customer and business sentiment in the last months according to Daniel Silver, an economist at JPMorgan. Silver also said that the recent U.S. government shutdown did not trigger a negative output in the private labor market.
With ADO National Employment Report showed an increase by 213,000 this month after the surge to 263,000 in December. This contradicted the forecast by economists at Reuters, who had predicted the private payrolls to advance 178,000 in January. The ADP report and Moody’s Analytics were jointly developed and published before the more comprehensive employment report by the government, which is scheduled to be published this Friday. The ADP report was in line with market data which included weekly filings for unemployment benefits even though it is not considered to be a reliable predictor of private payrolls as compared to the government’s employment report.
A recent Reuters survey of economists, it was likely that nonfarm payrolls will increase by 165,000 jobs at the beginning of the year, after jumping to 312,000 in December. The forecast of the unemployment rate remains unchanged at 3.9 percent. The National Association of Realtors reported on Wednesday that the home sales index has also dropped 2.2 percent, the weakest reading since the last 4 ½ years. The contracts issued for purchasing existing homes have remained at a low for three consecutive months. The drop in December suggests further weakening in home sales in the coming month.
This report is evidence of plunging consumer confidence in January. A few regional manufacturing surveys also predict a slowdown in economic activity in early 2019.
The fourth quarter GDP report, to be released on Wednesday has been delayed by the U.S government shutdown, which prevented the collection of data by the Census Bureau and the Bureau of Economic Analysis.