Private-Sector Gains 170,000 Jobs, Boosted by Services

The private sector created 170,000 jobs in January, boosted again by a surge in service-sector employment, according a report from ADP and Macroeconomic Advisors.

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With economists looking for signs of life in the jobs market, the ADP number was close to consensus estimates and likely sets the stage for solid though not overwhelming overall growth when the government releases its monthly report Friday.

ADP, which does not measure government workers, whose rolls have been reducing as the public sector looks to shave budgets, has traditionally been above the government's number during the economic slowdown.

The private payrolls report showed service jobs growing by 152,000 in January, after rising a revised 241,000 in December.

Goods-producing jobs rose 18,000 while manufacturing added 10,000 and construction gained 2,000 for the month.

"We can't have a sustained economic recovery that proceeds on the backs of the goods-producing sector alone," Joel Prakken, chairman of Macroeconomic Advisors, said in a CNBC interview. "There simply are not enough jobs in manufacturing to power the overall unemployment number. We need to see good, healthy gains in the service economy."

The total number of private sector jobs created is a substantial dropoff from December's report that showed a revised 292,000, revised down from 325,000.

The Labor Department on Friday is expected to report nonfarm payrolls growth of 159,000 and an unchanged unemployment rate of 8.5 percent, according to StreetAccount estimates. Economists sometimes use the ADP numbers to adjust their projected unemployment estimates.

ADP's numbers have been running on average 10,000 more than the government, though that number swelled to 92,000 in December, raising caution that seasonal distortions could be influencing the payroll firm's figures.