Haver Resources
Mar 06

U.S. ADP Payroll Gain Slows in February; Pay Growth Is Mixed

Summary
  • Employment increase is led by goods-sector hiring. Services hiring growth slows.
  • Wage growth for “job stayers” is unchanged but diminished for “job changers.”
  • Small business hiring declines while medium & large business employment moves up.

The ADP National Employment Report indicated that nonfarm private sector payrolls rose 77,000 (1.3% y/y) during February after increasing 186,000 in January, revised from 183,000, and gaining 161,000 in December, revised from 176,000. The increase was the weakest increase since July. A 139,000 February rise in ADP employment had been expected in the Action Economics Forecast Survey.

Growth in median annual pay for “job stayers” of 4.7% y/y in February was steady with January and compared to 5.1% y/y one year earlier. It remained below a September 2022 high of 7.8% y/y. Financial sector earnings rose 5.1% y/y while education & health services earnings rose 4.9% y/y. Professional & business service sector earnings increased 4.5% y/y and information pay rose 4.2% y/y. Median annual pay for “job changers” improved 6.7% y/y versus 6.8% y/y in January, but was below a 16.1% y/y high in April 2022.

Small business hiring (less than 50 employees) declined 12,000 (+0.7% y/y) in February, following a 45,000 January rise. Employment at medium-sized firms (50-499,000 employees) rose 46,000 (+1.0% y/y) after increasing 88,000 in January. Large business hiring (500+ employees) rose 37,000 (3.6% y/y) last month following a 69,000 January rise.

Goods-producing employment rose 42,000 (1.2% y/y), after rising 2,000 in January. The number of construction sector jobs rose 26,000 (3.9% y/y), following a 15,000 January increase. Jobs in the manufacturing sector rose 18,000 (-0.4% y/y), after weakening 17,000 in January. Natural resource & mining jobs fell 2,000 (+1.1% y/y), after a 4,000 rise.

The number of service-producing jobs rose 36,000 (1.3% y/y) last month, following a 184,000 January gain. Leisure and hospitality employment increased 41,000 (2.5% y/y), following a 54,000 January increase. The number of financial jobs rose 26,000 (2.0% y/y) after increasing 15,000. Employment in “other” services rose 17,000 (3.4% y/y), following a 13,000 gain in January. Professional & business services employment rose 27,000 (0.4% y/y) in February, after rising 17,000 in the prior month. Working lower, the number of education & health care jobs declined 28,000 (+1.9% y/y), after a 22,000 January increase. The number of jobs in trade, transportation & utilities fell 33,000 (+0.5% y/y), after a 47,000 January gain. Information sector hiring fell 14,000 (-0.3% y/y), reversing a 16,000 improvement.

By region, employment in the Northeast increased 55,000 (1.7% y/y) last month, after rising 52,000 in January. Employment in the Midwest rose 56,000 (1.1% y/y) following a 41,000 rise. In the West, employment fell 27,000 (+0.8% y/y), after a 22,000 January increase. In the South, employment fell 12,000 (+1.5% y/y), following a 53,000 gain.

The ADP National Employment Report and Pay Insights data can be found in Haver’s USECON database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver’s AS1REPNA database.

About The Author

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Thomas J. Moeller

Haver Analytics is pleased to bring Thomas J. Moeller’s commentaries on the state of the U.S. economy to its clients.

Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters’ Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.

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