Private sector job growth improved in February, although growth was slightly less than expected, payroll processing company ADP said on Wednesday.
Companies added 140,000 positions this month, up from the upwardly revised 111,000 in January, but slightly below the Dow Jones estimate of 150,000.
Job growth occurred in several areas, mainly in the leisure and hospitality sector with 41,000 jobs, and in the construction sector, which added 28,000 jobs. Other sectors showing solid gains included trade, transportation and utilities (24,000), finance (17,000) and the other services category (14,000).
Of the total, 110,000 came from the services sector, while goods producers added 30,000. Growth was concentrated among larger companies, as establishments with fewer than 50 employees contributed just 13,000 employees to the total.
Along with job growth, annual wages rose 5.1% for those who kept their jobs, which ADP said was the smallest increase since August 2021, a possible indication that inflationary pressures are easing.
The report says the labor market is paying extra attention to signs that US economic growth will stagnate this year, after gross domestic product posted a solid 2.5 percent annual increase in 2023.
“Job growth remains solid. Wage increases are trending lower, but are still above inflation,” said Nela Richardson, chief economist at ADP. “In short: the labor market is dynamic, but it will not make a difference this year when it comes to a Fed interest rate decision.”
ADP's report precedes the official release of the Department of Labor's nonfarm payrolls, which takes place on Friday. In recent months, ADP has consistently undershot the closely watched Bureau of Labor Statistics report, which showed an increase of 353,000 in January, more than triple the ADP estimate.
Economists polled by Dow Jones expect Friday's report to show an increase of 198,000.