Just as the hard indicators in the US economy were starting to roll over, with whisper expectations that the Fed’s 3 projected rate hikes in 2017 would gradually be reduced to 2 (in line with market expectations) ADP reported a blistering 246K jobs were added in January, far above the 168K expected and certainly well above the Fed’s “guidance” of what would be normal monthly job growth in the 80-120K area. This was the highest monthly jobs addition since June, following a modest downward revision to December jobs from 153K to 151K, and even the construction and manufacturing sectors saw job additions of 25,000 and 15,000, respectively

Most jobs were added by small and medium firms as follows:

And with both the Fed due out later today, and the official payrolls report out on Friday, the potential for an upside surprise to both is suddenly in play, which explains why the dollar has spiked on the news to session highs. That said, beware with outlier prints in this series: ADP is notorious for having a dreadful predictive track record.

The breakdown by job category:

“The U.S. 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. “Further analysis shows that services gains have rebounded from their tepid December pace, adding 201,000 jobs. The goods producers added 46,000 jobs, which is the strongest job growth that sector has seen in the last two years.”

Mark Zandi, chief economist of Moody’s Analytics said, “2017 got off to a strong start in the job market. Job growth is solid across most industries and company sizes. Even the energy sector is adding to payrolls again.

Here is the change in Total Nonfarm Private Employment by Company Size;