The measure of private sector job growth increased by 246,000 for the month, well above the 168,000 that economists were expecting. The measure grew by 153,000 in the prior month.
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'The US labor market is hitting on all cylinders'
ADP's reading on the growth of private payrolls in the US surged above expectations for the month of January.
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The huge ADP beat is also a good sign of strength in the labor market ahead of the January jobs report, which is due out on Friday. That more comprehensive look is expected show nonfarm payrolls grew by 175,000 payrolls in the month of January.
"The US labor market is hitting on all cylinders and we saw small and midsized businesses perform exceptionally well," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, in a press release accompanying the report.
While much of the gain came from service sector jobs, Yildirmaz said that the market added 46,000 goods-producing jobs — the most in two years.
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Ward McCarthy, the Chief Financial Economist at Jefferies, said that while ADP payrolls doesn't necessarily correlate with a stronger jobs report, it does provide some hope for an upside surprise.
"Due to an erratic correlation between the ADP and NFP releases, JEF Economics will not revise our projection for a 190K rise in January nonfarm payrolls and a 185K rise private payrolls," said McCarthy in a note to clients on Wednesday. "However, we do think that the combination of the strength of the ADP headline change combined with the rebound in small firm hiring does pose an upside risk to our payroll projection."
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