U.S. private employers provided fewer jobs than expected in February, and disappointed economists who had anticipated that the early stages of vaccine rollout and declining COVID-19 cases would allow jobs to pick up sharply during the month.
Private wages in the United States increased by 117,000 in February, ADP said in its closely monitored monthly report Wednesday morning. This followed an adjusted gain of 195,000 salaries in January, which in turn had reversed a decline of about 75,000 salaries in December. Consensus economists expected an increase of 205,000 private wages for February, according to Bloomberg’s consensus data.
“The modest 117,000 gain in the ADP measure on private wages for February, down from a revised 195,000 increase the month before, is disappointing given that the fallout in cases of coronavirus cases and the resulting repeal of containment measures should give the economy a bigger boost. , “wrote Paul Ashworth, chief economist at the United States for Capital Economics, in a note Wednesday morning.
Service companies made greater progress in restoring jobs last month. Across the private service sector, wages rose by 131,000 in February, led by a gain of 48,000 in trade, transport and utilities. Wages for education and health care followed with an increase of 35,000 salaries, and leisure and hospitality jobs increased by 26,000. In services, only information salaries fell in February, although no jobs for financial activities were registered.
However, manufacturing and construction jobs in the commodity-producing sector declined as winter weather probably partially offset employment in these industries. Private construction sites fell by 3,000 in February, while manufacturing wages fell by 14,000.
U.S. labor market data has been erratic in recent weeks, as harsh winter weather in states such as Texas weighed employment but also frustrated data collection for job report surveys, which can result in data that may underestimate the extent of ongoing labor market weakness. Other new reports showed signs of this noise: This week’s initial unemployment claims rose in early February to almost 850,000 before falling sharply to 730,000 last week.
But temporary factors aside, many economists say the labor market is on track for a longer-term recovery later this year, with the help of the vaccine-activated economic recovery.
“Of course this was a disappointment. Job growth has been softer at the end of 2020 and the beginning of 2021 than we would like to come out of the recession we experienced last year, Gus Faucher, PNC chief economist, told Yahoo Finance Live on Wednesday morning. “With that said, I expect to see very strong job growth later this year.”
“We get vaccine distribution, we have this big stimulus bill going through Congress, low interest rates from the Fed, better weather in the spring that allows for more outdoor activity,” he added. “So I think the job market is a bit soft right now. But I expect that there will be much better improvements as we enter the spring and summer of this year. ”
On Friday, the US Department of Labor will report the results of the “official” monthly report for February. The ADP report has usually been an unreliable indicator of the results of the government report due to differences in survey methodology. In January, for example, ADP showed one private profit of 174,000 before revisions in its first print, while the Labor Department showed private salaries increased by a disappointing 6000. With the ADP report, only individuals on an active salary are counted as employees, while the Labor Department estimates that each person who received a salary check during the middle of the month survey week for the report as an employee.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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