Private payrolls gained 475K jobs in February: ADP

U.S. businesses added 475,000 workers in February, according to data from payroll processor ADP released Wednesday, beating economists’ expectations.

The ADP National Employment report showed strong job growth among midsize and large businesses in February dampened by a decline in small-business employment. While firms with fewer than 50 employees lost 96,000 jobs on the month, midsize businesses gained 18,000 workers and firms with 500 or more employees gained 552,000. Analysts expected private payrolls to rise by roughly 380,000 last month.

“Hiring remains robust but capped by reduced labor supply post-pandemic. Last month large companies showed they are well-poised to compete with higher wages and benefit offerings, and posted the strongest reading since the early days of the pandemic recovery,” said Nela Richardson, chief economist at ADP. 

The strong jump in private sector payrolls is a promising sign ahead of the Friday release of the federal job report, which also includes public sector employment. While the ADP and federal jobs reports have often diverged during the pandemic, most economists expect the U.S. to see a gain of roughly 400,000 jobs in Friday’s report.

Job growth has remained strong since October even as the emergence of the omicron variant of COVID-19 rattled the U.S. economy and caused a temporary slowdown in consumer activity. Wages have risen rapidly as employers struggle to fill a record number of open jobs and employees quit their current gigs for ones with better pay and benefits at unprecedented rates.

The ADP report showed signs of smaller firms failing to match the wage-raising ability of larger chains.

“Small companies lost ground as they continue to struggle to keep pace with the wages and benefits needed to attract a limited pool of qualified workers,” Richardson said.