Private sector added 117K jobs in February

Employment in the private sector grew by 117,000 jobs last month, according to ADP, despite cuts at big companies, manufacturers and builders, as the economy continued its slow recovery.

The ADP National Employment Report, released Wednesday, indicated that 32,000 jobs were added in February at small businesses, including 21,000 at businesses with between one and 19 employees, and 12,000 at companies with between 20 and 49 employees. Businesses with between 50 and 499 employees gained 57,000 jobs. Large businesses added a total of 28,000 jobs, with 33,000 added at companies with between 500 and 999 employees minus 5,000 jobs lost at companies with 1,000 employees or more.

Goods-producing companies shed 14,000 jobs, including 14,000 in manufacturing and 3,000 in the construction industry, partially offset by 3,000 added in the natural resources and mining sector. Service-providing companies added 131,000 jobs, including 22,000 in professional and business services like accounting and tax preparation.

The job gains bode well for the overall economic recovery, although the pace remains slow, even as the distribution of COVID vaccines began to accelerate in recent weeks. The Biden administration is trying to pass its American Rescue Plan by March 14 before enhanced unemployment benefits run out for millions of workers who still have not been able to find jobs since last year’s layoffs hit the economy.

"The labor market continues to post a sluggish recovery across the board," said Nela Richardson, chief economist at ADP, in a statement. "We’re seeing large-sized companies increasingly feeling the effects of COVID-19, while job growth in the goods-producing sector pauses. With the pandemic still in the driver's seat, the service sector remains well below its pre-pandemic levels; however, this sector is one that will likely benefit the most over time with reopenings and increased consumer confidence."

The job market is continuing to struggle, according to Mark Zandi, chief economist at Moody’s Analytics, which helps compile the ADP National Employment Report each month. He predicted that when the official jobs numbers come out on Friday from the U.S. Bureau of Labor Statistics, the job gains will be about 150,000 for both the private and public sectors.

“If that’s the case, employment has effectively gone sideways since last October,” Zandi explained during a conference call Wednesday with reporters. “We’ve gone up a bit, down a bit, all around, but effectively nowhere over the last four or five months.”

He noted that the stress in the job market is still evident in the unemployment insurance data, with initial UI claims above a million per week, which is consistent with a stressed labor market.