-Mark Zandi, Moody's Analytics Chief Economist
US private companies created more than 200,000 jobs in January for a fifth straight month, adding to signs of sustainable labour market growth. According to ADP report, private sector employment rose by 213,000 jobs in January, after the 253,000 increase a month earlier and shy of forecasts for a 220,000 new positions. The gauge is the forerunner to non-farm payroll data on Friday that is expected to show 230,000 new jobs were created last month, while the unemployment rate is seen at 5.6%, still slightly above the range considered full employment by the Fed policy makers is 5.2% to 5.5%.
Activity growth in the US services sector recovered in January, though companies reported the weakest level of new business growth in more than five years. According to the data compiler Markit, the final reading of the services PMI climbed to 54.2 in January, up from both the preliminary estimate of 54.0, as well as the December figure of 53.3, the lowest level in ten months. The rebound in the services sector activity was also reflected in the ISM report, which showed US service companies kicked off the new year on a firmer footing. The ISM non-manufacturing PMI rose to 56.7 in January compared with an upwardly revised 56.5 in December. The index has been hovering above the crucial 50-point mark, which separates growth from contraction, since November 2009.
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