Private wage growth disappointed in February, despite encouraging signs of economic growth, according to an ADP report on Wednesday.
Companies added only 117,000 positions for the month, well below the 225,000 forecasts of economists surveyed by the Dow Jones.
The total also fell sharply from 195,000 jobs revised upwards in January.
The ADP report “is a disappointment, given that the decline in coronavirus cases and the resulting elimination of isolation measures should give the economy a bigger blow,” said Paul Ashwoth, chief economist at Capital Economics.
The poor reading of the ADP comes despite solid projections for economic growth in the first quarter. According to the Atlanta Federal Reserve’s GDPNow tracker, the US is on track for a 10% gain to start 2021.
“The labor market continues to recover slowly everywhere,” said Nela Richardson, chief economist at ADP. “We see large companies increasingly feeling the effects of COVID-19, while job growth in the goods-producing sector stops.”
All the net job growth came from services.
Trade, transport and utilities led the sectors last month, adding 48,000 positions. Education and health services grew by 35,000, while the hospitality industry, which was the worst hit by the pandemic, added just 26,000 jobs. The sector fell 3.8 million places from where it was a year ago, just before the worst Covid-19 crisis hit.
Professional and business services contributed 22,000 in total.
Production lost 14,000 jobs for that month, while construction lists fell by 3,000.
“With the pandemic still in the driver’s seat, the service sector remains well below its pre-pandemic levels; however, it is this sector that will benefit most over time from the reopening and increased consumer confidence,” Richardson said.
Companies with between 50 and 499 employees recorded the highest growth, with 57,000 new jobs, while small enterprises added 32,000 and large firms contributed 28,000.
Although the figures may differ greatly, the ADP survey can sometimes provide clues to the more closely monitored nonfarm payroll report by the Department of Labor each month.
January produced only 49,000 non-farm jobs, according to the government, well below the ADP estimate, which is compiled with Moody’s Analytics. The February government report is expected to show a gain of 210,000, according to Dow Jones estimates.