MercoPress. South Atlantic News Agency

US private payrolls increased in January, but the housing market is down

The ADP National Employment Report showed private payrolls increased by 213,000 in January after surging 263,000 in December

United States private payrolls increased solidly in January, pointing to sustained labor market strength despite a recent easing in consumer and business confidence that has suggested a loss of momentum in the economy. The strong hiring shown in the ADP National Employment Report on Wednesday also suggested there had been minimal impact on the labor market from the just-ended 35-day partial shutdown of the federal government.

Other data showed contracts to buy existing homes tumbled to a more than 4-1/2-year low in December.

Amid growing uncertainty over the economy’s outlook, the Federal Reserve on Wednesday kept benchmark U.S. interest rates steady and said it would be patient in lifting borrowing costs further this year.

The ADP National Employment Report showed private payrolls increased by 213,000 in January after surging 263,000 in December. The ADP report, which is jointly developed with Moody’s Analytics, was published ahead of the government’s more comprehensive employment report for December scheduled for release on Friday.

While the ADP report is not considered a reliable predictor of the private payrolls portion of the government’s employment report because of differences in methodology, it was in line with other market data, including weekly filings for unemployment benefits, that have suggested a healthy jobs market.

The dollar fell against basket of currencies on the Fed’s dovish statement on interest rates, while U.S. Treasury prices rose. Stocks on Wall Street extended gains.

In a separate report on Wednesday, the National Association of Realtors said its pending home sales index, based on contracts signed last month, dropped 2.2% to 99.0, the weakest reading since April 2014.

Contracts to purchase homes have now declined for three straight months. Pending home sales become sales after a month or two, and last month’s drop suggested further weakness in existing home sales after they hit a three-year low in December.

Pending home sales fell 9.8 percent from a year ago, the 12th straight month of annual decreases. Contracts fell in the South, Northeast and Midwest. They rose in the West.

The weak housing report added to surveys showing a plunge in consumer confidence in January and some regional Fed manufacturing surveys that have suggested a slowdown in economic activity in the fourth quarter and early in 2019.

Economists believe U.S. economic growth cooled in the fourth quarter from the July-September period’s brisk 3.4% annualized rate. The advance fourth-quarter GDP report, which was scheduled for release on Wednesday, has been delayed as the government shutdown prevented the collection of source data by the Commerce Department’s Bureau of Economic Analysis and Census Bureau.

Despite the weakness in signed contracts and sales, the outlook for the housing market is improving amid a moderation in house price inflation.