• Private sector employment increased by 174,000 in January, according the ADP National Employment Report. Employment fell in December, according to both the ADP report and the government’s monthly job report.
• January job gains were broad-based across firm sizes and industries.
• PNC expects total net job growth of 50,000 in January in the government’s official employment report, to be released on Friday, February 5. PNC expects the unemployment rate to increase slightly to 6.8%.

Private-sector employment rose by 174,000 in January, according to the ADP National Employment Report, based on records from the payroll-processing firm. This followed job losses of 78,000 in December (revised from job losses of 123,000). December was the first month of job losses in the ADP report since April.

Employment rose by 19,000 in goods-producing industries in January, primarily in construction; manufacturing employment barely rose over the month. Employment in private services-providing industries rose by 156,000 over the month, including a small increase in leisure/hospitality services, which has been hit especially hard by the pandemic.

Small firms (fewer than 50 employees) added a net 51,000 jobs over the month, with a gain of 84,000 in mid-sized companies (50 to 499 employees). The largest businesses added 39,000 jobs in January.

The Bureau of Labor Statistics releases the federal government’s official jobs report for January on Friday, February 5. In December the U.S. economy lost 140,000 jobs in December, according to the BLS, including job losses of 95,000 in the private sector. This was the first month of net job losses in the U.S. since April. Employment fell in leisure/hospitality services by almost 500,000 in December, including job losses of almost 300,000 in bars and restaurants, as those businesses suffered because of a resurgence in coronavirus cases.

PNC expects the BLS report to show net job growth of 50,000 in January, including private-sector gains of 80,000. PNC expects a small increase in the unemployment rate in January, to 6.8%, from 6.7% in November and December. The unemployment rate is down from a peak of 14.8% in April, but remains far above its pre-pandemic level of 3.5%.

Job growth will be weak in early 2021 as the economy continues to struggle with the pandemic. But job growth should be much stronger starting in the spring as vaccination efforts, warmer weather, and stimulus funds support gains in consumer spending.