US companies added more jobs than expected in February, underscoring persistent demand for labor that’s keeping wage growth elevated.
(Bloomberg) — US companies added more jobs than expected in February, underscoring persistent demand for labor that’s keeping wage growth elevated.
Private payrolls rose 242,000 last month after an upwardly revised 119,000 increase in January, according to figures out Wednesday from ADP Research Institute in collaboration with Stanford Digital Economy Lab. The median estimate in a Bloomberg survey of economists called for a 200,000 advance.
The gain was led by hiring in leisure and hospitality as well as financial activities. Businesses with more than 50 employees also contributed strongly, while small firms shed jobs for a fifth-straight month. The Midwest was the only region to post a drop in payrolls.
The data underscore what’s still a tight labor market despite the Federal Reserve’s aggressive efforts to cool it down. Demand for workers continues to exceed supply, and layoffs have been mostly contained to tech and banking. Even service-sector companies are finally attracting more workers after having trouble hiring through most of the pandemic.
Read More: Powell Unveils Hawkish Tilt as Officials Ready for March Meeting
Data out later Wednesday is forecast to show job openings are still extremely elevated, and economists expect a strong pace of hiring and low unemployment in Friday’s government jobs report.
Workers who stayed in their jobs experienced a 7.2% pay increase in February from a year ago, the slowest in 12 months, the ADP data showed. For those who changed jobs, the median increase in annual pay ticked down to 14.3%.
“We’re seeing robust hiring, which is good for the economy and workers, but pay growth is still quite elevated,” Nela Richardson, chief economist at ADP, said in a statement. “The modest slowdown in pay increases, on its own, is unlikely to drive down inflation rapidly in the near-term.”
Fed Chair Jerome Powell has focused on wages as a factor that making inflation sticky. He said the job market will need to ease for price pressures to cool, though the central bank isn’t looking to put millions of people out of work, according to testimony before the Senate on Tuesday.
ADP bases its figures on payroll data of more than 25 million US workers.
–With assistance from Kristy Scheuble and Reade Pickert.
(Adds graphic)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.