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February Sees Modest Job Growth: Private Sector Adds 140,000 Positions, Slightly Below Expectations

In February, the private sector's employment figures saw an increase with 140,000 new jobs added, according to the payroll company ADP. This uptick, from January's revised figure of 111,000, was slightly below the anticipated 150,000 jobs forecasted by Dow Jones.

The leisure and hospitality industry led the way with 41,000 new positions, followed by construction with 28,000 and trade, transportation, and utilities adding 24,000 jobs.

The report, a precursor to the Labor Department's highly anticipated nonfarm payrolls data due on Friday, shows a continued but modest growth in employment. Notably, service industries contributed 110,000 jobs, while goods-producing sectors added 30,000. Larger firms were the main drivers of job creation, with smaller businesses, those with fewer than 50 employees, adding only 13,000 jobs to the economy.

ADP also noted a 5.1% year-on-year increase in wages for those remaining in their positions, marking the smallest rise since August 2021. This slowdown in wage growth might suggest easing inflation pressures.

ADP's chief economist, Nela Richardson, commented on the state of the labor market, indicating its strength and dynamism but also noting that it does not necessarily influence the Federal Reserve's decisions on interest rates this year. The labor market's condition is a critical factor for economic forecasts, especially after the U.S. economy showed a robust 2.5% annual growth rate in 2023.

The labor market trends highlighted by ADP often provide insight into the broader economic landscape, particularly in comparison to the Bureau of Labor Statistics' more comprehensive nonfarm payroll figures, which recently reported a significant increase of 353,000 jobs in January, surpassing ADP's estimates. Analysts are looking forward to the upcoming report, expecting it to reveal a 198,000 job increase.


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