ADP February Job Report Highlights Economic Slowdown Concerns
A person exits a Home Depot store in Midtown Manhattan on February 26, 2025, in New York City.
Photo credit: Eduardo Munoz Alvarez | Corbis News | Getty Images
Private Sector Job Growth Weakens
The latest report from payroll processing giant ADP indicates that the private sector added only 77,000 jobs in February, a notable decrease from the revised figure of 186,000 jobs added in January. This latest number falls short of the 148,000 jobs predicted by Dow Jones and marks the weakest growth since July of the previous year.
Economic Concerns and Future Implications
This slowdown has intensified concerns regarding the possibility of an economic downturn. Analysts are particularly worried that the tariff proposals under President Donald Trump’s administration might lead to higher inflation rates. According to ADP’s Chief Economist, Nela Richardson, “Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month.”
Sector Performance Overview
The ADP report reflects a mixed performance across various sectors:
- Trade, Transportation, and Utilities: Lost 33,000 jobs.
- Education and Health Services: Saw a decline of 28,000 jobs.
- Information Services: Experienced a decrease of 14,000 jobs, reflecting uncertainty in AI-driven companies.
- Leisure and Hospitality: Gained 41,000 jobs, providing a positive counterpoint.
- Professional and Business Services: Increased by 27,000 jobs.
- Financial Activities and Construction: Each sector added 26,000 jobs.
- Manufacturing: Reported an increase of 18,000 jobs, despite a less favorable ISM manufacturing survey.
This mix highlights a unique balance between services and goods-producing sectors, with both adding 36,000 and 42,000 jobs, respectively.
Employment Trends and Company Sizes
The data indicates a trend toward employment growth within larger companies. Organizations with 500 or more employees added 37,000 jobs, while those with fewer than 50 employees reported a loss of 12,000 jobs.
Looking Ahead
The ADP report serves as a precursor to the forthcoming Bureau of Labor Statistics report on nonfarm payrolls, due for release on Friday. While different methodologies can lead to discrepancies between the two reports, the previous month saw private payrolls increase by just 111,000 according to the BLS, in contrast to the ADP’s much higher count.
Economists expect the upcoming report to indicate job gains of around 170,000 alongside a steady unemployment rate of 4%.