Private companies added 63,000 jobs in February, January revised to just 11,000 additions, ADP says
Private sector hiring was slightly better than expected in February, but most of the jobs created came from just two sectors, ADP reported Wednesday.
Companies added a seasonally adjusted 63,000 workers during the month, according to the payroll processing firm’s latest update; That’s an improvement from January’s downwardly revised reading of 11,000 and better than the Dow Jones consensus estimate of 48,000.
Although the aggregate was above expectations, the breadth problem continued to be a problem for the labor market.
The education and healthcare sector, which is the main driver of job creation, easily led all sectors, adding 58,000 new jobs this month. After that, construction contributed 19,000, with the two sectors offsetting stagnant growth in most other sectors.
Professional and business services saw a decline of 30,000 positions, with manufacturing losing 5,000 and trade, transportation and utilities losing 1,000 positions. Apart from an 11,000 gain in information services, there was little movement elsewhere. Manufacturing has continued to decline despite President Donald Trump’s efforts to use tariffs to reform jobs in the industry.
On the wage side, the salaries of those who remained in their jobs increased by 4.5%, remaining unchanged compared to January. However, the wage increases of those who changed jobs decreased by 0.3 points compared to the previous month, falling to 6.3%. These results reduced the incentive to switch jobs to the lowest level since ADP began tracking the metric.
“We’ve seen hiring pick up and wage growth remaining solid, especially for those who remain employed,” said Nela Richardson, ADP chief economist. “But given that hiring is concentrated in just a few industries, our data suggests that switching jobs does not yield widespread wage benefits.”
As of recent months, job creation has been concentrated in businesses with fewer than 50 employees. While this group gained 60,000, large businesses with 500 or more employees reported a decline of 10,000 and midsize firms reported a decline of 7,000.
Job growth fell a step last year as the Trump administration restricted illegal immigration and the pace of hiring slowed post-Covid. Layoffs also remained low, although companies were reluctant to add workers.
The report includes questions about the state of the labor market, as well as concerns about stubbornly rising inflation; These concerns become more evident with the conflicts in Iran and the Middle East.
Recent statements from Federal Reserve officials indicate slightly higher confidence that the employment picture is stabilizing. At the same time, concerns are increasing that the increase in oil prices will increase inflation. According to CME Group’s report, investors are now indicating that the Fed’s next rate cut will not come until at least July, reducing the possibility of a second rate cut this year. FedWatch scout.
The ADP announcement comes ahead of the Bureau of Labor Statistics’ nonfarm payrolls report on Friday. Wall Street expects a 50,000 job gain in February, according to the report, which, unlike ADP, also includes government hiring. Economists expect the unemployment rate to remain steady at 4.3%.
