ADP: Slower Job Gains

Bottom Line:   ADP reported a notable slowdown in the pace of hiring in January with payrolls rising 106k, well below consensus estimates looking for 180k. There were modest upward revisions to prior months, but not enough to offset the surprise miss. Payrolls in the trade, transportation, and utilities sector, the largest segment of the ADP and the government datasets, FELL 41k jobs. Payrolls in education and health services rose more slowly, as did those in professional services. Leisure and hospitality saw strong gains. And finally, construction jobs fell sharply as the slowdown in residential started to take a toll.  Overall, ADP's report shows potential downside risk to estimates of 190k for Friday's national payroll data. Moreover, it offers the Federal Reserve's FOMC, which is meeting today, the first significant sign of a slowing trend rate of job creation.