Private sector employers added 139,000 jobs in February, according to payroll giant ADP, with the cold winter weather sapping the hiring numbers.
ADP revised downward its January hiring figures, from 175,000 to just 118,000, in part as a reflection of the official figures from the U.S. Bureau of Labor Statistics.
“The number for February was on the soft side,” said Mark Zandi, chief economist with Moody’s Analytics, which compiles the monthly national employment report with ADP. “This is the third month in a row of weak job growth.”
The service sector added 120,000 jobs in February, up from a downwardly revised January number of 116,000. Professional and business services, which include accounting and taxes, among other services, contributed the most growth in service-providing industries, adding 33,000 jobs. But that was well below the average gains for the industry last year. Employment in financial activities fell for the second straight month after January’s reading was downwardly revised to a job loss of 8,000.
Expansion in the combined trade, transportation and utilities sector accelerated slightly after a poor showing in January, gaining 31,000 jobs in February. These two months have been the weakest for financial services employment since January and February of 2011.
The goods-producing sector rose by 19,000 jobs in February, up from a downwardly revised total of 12,000 in January. Nearly all of the growth came from the construction industry, which added 14,000 jobs over the month, despite the cold weather. This followed downwardly revised increases of 17,000 in the prior two months. Manufacturing eked out a small gain in February, adding just 1,000 jobs. January’s decline in manufacturing was upwardly revised to a loss of just 7,000 jobs.
Small businesses added 59,000 jobs, including 32,000 at companies with between one and 19 employees, and 28,000 at small businesses with between 20 and 49 employees.
Midsize businesses with between 50 and 499 employees added 35,000 jobs. Large businesses with between 500 and 999 employees added 1,000 jobs, while larger businesses with 1,000 employees or more gained 43,000 jobs.
Zandi attributed the disappointing employment numbers to several reasons, including the cold weather, which is also affecting other economic data. “When weather is bad, people won’t go to work and won’t get paid,” he explained.
Another reason for the slowdown from the pace of roughly 200,000 jobs added per month last year is the expiration of the emergency unemployment compensation program, along with cutbacks in the food stamp program. “The combination of those two things is going to shave a couple of tenths of a percentage point off of GDP growth this year, and much of that impact is occurring right now, in the first part of the year,” he said. “Consumer spending in general has weakened, in part as these households adjust to the effects of the expiration of these benefit programs.”
A third reason for the slower employment growth is a slowdown in inventory accumulation after a sharp increase in the growth of inventories in the second half of last year, according to Zandi. But he noted that all of the factors behind the slowdown are likely to be temporary, and he expects to see a pickup in employment the spring and summer months.
“In my view, the underlying growth in the economy, subtracting for the weather effects and these other temporary forces and vagaries in the data, is much stronger than the current data would suggest,” he said.