Private sector job growth rises less than expected in February: ADP
Hiring by private companies came in lower than expected in February, ADP says
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Hiring by U.S. companies continued to chug along at a healthy pace in February, although growth came in below expectations, according to the ADP National Employment Report released Wednesday morning.
Companies added 140,000 jobs last month, missing the 150,000 gain that economists surveyed by Refinitiv predicted but up from the revised 111,000 figure in January.
Wall Street is watching the labor market closely for signs that it is finally slowing down and the Federal Reserve can pivot to cutting interest rates.
The leisure and hospitality sector accounted for the most job gains in February, with the industry onboarding 41,000 new workers. There were also substantial hiring gains in construction (28,000), transportation and utilities (24,000), financial activities (17,000) and other services (14,000).
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Workers replace power lines in Monterey Park, California, on Oct. 6, 2023. (Frederic J. Brown/AFP via Getty Images / Getty Images)
In a welcoming sign for the Federal Reserve, wage growth continued to shrink in February. Annual pay rose 5.1% last month, the smallest increase since August 2021, according to the report. However, for workers who switched jobs, wages climbed 7.6%, the first increase since November 2022.
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"Job gains remain solid. Pay gains are trending lower but are still above inflation," said ADP chief economist Nela Richardson. "In short, the labor market is dynamic, but doesn’t tip the scales in terms of a Fed rate decision this year."
Elementary school educators gather to talk to prospective hires during a hiring event for Prince George's County school district hosted at Dr. Henry A. Wise Jr. High School in Upper Marlboro, Maryland, on Aug. 2, 2023. ((Amanda Andrade-Rhoades/For The Washington Post via Getty Images) / Getty Images)
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The data precedes the release of the more closely watched February jobs report from the Labor Department on Friday morning, which is expected to show that employers hired 200,000 workers, following a gain of 353,000 in January. The unemployment rate is expected to hold steady at 3.7%.
ADP numbers can differ drastically from the official government count and have historically been an unreliable indicator of what's to come.
In other economic news on Wednesday morning, the Labor Department reported that there were 8.86 million job openings in January, a small decrease from the downwardly revised 8.89 million openings reported the previous month. The figure indicates that demand for employees still outpaces the supply of available workers.