The US private sector added 63,000 jobs in February, beating economists’ initial forecast of 48,000. While the data showed growth, the ADP report revealed that the labor market momentum was uneven and driven by only a few sectors.
The education and healthcare sectors remained the largest contributors with 58,000 new jobs, followed by construction. On the other hand, the manufacturing and professional services sectors continued to record job losses, suggesting that the Trump administration’s tariff policies have not yet had an impact on bringing back manufacturing jobs.
Wage growth for workers who stay in their current jobs held steady at 4.5%, but incentives to change jobs have fallen to their lowest levels. At the same time, the fall in the wage premium for job changers suggests that the labor market no longer offers a significant financial advantage for those seeking new opportunities.
Small firms with fewer than 50 employees were the main drivers of hiring this month, accounting for almost all of the private sector job growth. This trend contrasts with mid-sized companies recording staff reductions, while large companies showed very minimal growth.
The report was released as markets worried about inflation triggered by the conflict in the Middle East. The uncertainty has investors predicting the Federal Reserve will hold off on cutting interest rates until at least July, while awaiting the official government jobs report on Friday.
