Private payroll growth disappointed in February, despite other encouraging signs of economic growth, according to a Wednesday report from ADP.
Companies added just 117,000 positions for the month, well below the 225,000 forecast from economists surveyed by Dow Jones.
The total also represented a sharp drop from the upwardly revised 195,000 jobs in January.
The ADP report “is disappointing as the decline in coronavirus cases and the resulting lifting of containment measures should give the economy a bigger blow,” said Paul Ashworth, chief US economist at Capital Economics.
The weak ADP value comes despite solid forecasts for economic growth in the first quarter. According to the Atlanta Federal Reserve’s GDPNow tracker, the US is on track for a 10% gain from 2021.
“The job market is still showing a slow recovery across the board,” said Nela Richardson, chief economist at ADP. “We see that large companies are increasingly feeling the effects of COVID-19, while job growth in the goods-producing sector is stalling.”
All net job growth came from the services side.
Trade, transportation and utilities led sectors last month with the addition of 48,000 positions. Education and health care were up 35,000, while the battered hospitality industry, suffering the worst of the pandemic-related blow, added just 26,000 jobs. The sector is down 3.8 million positions from a year ago, just before the worst Covid-19 crisis hit.
Professional and business services contributed 22,000 to the total.
Production lost 14,000 jobs this month, while the number of construction rolls decreased by 3,000.
“With the pandemic still in the driver’s seat, the services industry remains well below pre-pandemic levels; however, this industry is likely to benefit the most over time with reopenings and greater consumer confidence,” said Richardson.
Companies with between 50 and 499 employees saw the greatest growth, with 57,000 new jobs, while small businesses added 32,000 and large companies contributed 28,000.
While the numbers can vary widely, the ADP survey can sometimes provide clues to the better-viewed nonfarm payroll report that the Labor Department releases each month.
January provided just 49,000 non-farm jobs, well below the ADP estimate compiled with Moody’s Analytics, according to the government. The February government report released Friday is expected to show a profit of 210,000, according to Dow Jones estimates.