ADP finds private sector added 183,000 jobs in February
The private sector gained 183,000 jobs in February, according to payroll giant ADP, as the red-hot economy shows some possible signs of cooling, particularly among small companies.
Small businesses added 12,000 jobs last month. The smallest companies, with between one and 19 employees, actually lost 8,000 jobs, but that was more than offset by a gain of 20,000 jobs at somewhat larger small businesses with between 20 and 49 employees.
Midsized businesses with between 50 and 499 employees added 95,000 jobs in February. Large businesses gained 77,000 jobs, including 22,000 at companies with between 500 and 999 employees and 54,000 at businesses with 1,000 employees or more.
“We saw a modest slowdown in job growth this month,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, in a statement. "Midsized companies have been the strongest performer for the past year. There was a sharp decline in small business growth as these firms continue to struggle with offering competitive wages and benefits."
The goods-producing sector added 44,000 jobs in February, while the service-providing sector gained 139,000 jobs, including 49,000 in professional and business services, which includes accounting, tax prep and other types of professional services. Franchises added 24,500 jobs in February.
The January total of jobs added was revised upward from 213,000 to 300,000 for technical reasons related to figures from the U.S. Bureau of Labor Statistics.
Mark Zandi, chief economist at Moody’s Analytics, which compiles the monthly national employment report with ADP, said the 183,000 private sector jobs created in the month of February is a solid number, although it suggests that job growth is slowing. “The job gains were broad based, although the retail and leisure and hospitality sectors are showing some softness,” he said during a conference call with reporters Wednesday. “The rate of growth there has moderated. Small companies also look to be adding to payrolls more modestly. They had been adding more strongly, but recently it appears they’re becoming a little bit more cautious in their hiring. That would be consistent with the weaker job growth we’re observing for retailers and for leisure and hospitality. There are a lot of small businesses in those industries.”
Zandi also sees signs that the impact of the Tax Cuts and Jobs Act's passage at the end of 2017 is beginning to wear off: “I do think there is growing evidence of a more sustained, meaningful slowing in payroll employment growth, and that would be consistent with a broader slowing in the growth rate of the overall economy,” he said. “If you look back almost a year now, growth hit its peak in the second quarter of 2018. That’s when the tax cuts were really beginning to juice up growth.”
However, he added that the slowdown could also be just a temporary blip in an otherwise strong economy, as was seen after the stock market crash of 1987 and the Y2K fears leading up to Jan. 1, 2000.