The U.S. economy added 235,000 private, non-farm jobs in February, according to the monthly employment report released today by payroll-management firm ADP and its partner Moody's Analytics. The seasonally adjusted result is 3.68 percent lower than January's upwardly revised addition of 244,000 jobs, and marks a 16 percent decrease from last February, when 280,000 jobs were created. But 235,000 is still a significantly high number of jobs, especially for an economy that is running at near full employment.
“The job market is red hot and threatens to overheat," said Mark Zandi, chief economist of Moody's Analytics in a press release. "With government spending increases and tax cuts, growth is set to accelerate.”
In a conference call this morning, Zandi discussed how tariffs on steel and aluminum could impact employment in the future.
"If the tariff increases are comparable to levels stated by the president earlier this week—25 percent on steel, 10 percent on aluminum—that, by itself, barring any fallout from our trade partners, wouldn't have too significant of an impact [on employment]," Zandi said. But Zandi estimates we could see a decrease of approximately 50,000 jobs in related downstream industries, although that "isn't significant in the grand scheme of things." While he does not anticipate a dramatic response from U.S. trade partners, the ramifications of that kind of response would be troublesome for the economy, and Zandi does estimate that a reactionary response from our trade partners could result in the loss of hundreds of thousands of jobs. But, again, he said that the likelihood of that type of response is low.
Small businesses—firms that employ between one and 49 employees—gained 68,000 jobs in February. Within that data set, firms that employ fewer than 20 people gained 27,000 jobs, and firms that have 20 to 49 employees added 41,000 jobs. Mid-sized businesses—those with 50 to 499 employees—accounted for the largest share of employment gains by company size for the fourth consecutive month, with 97,000 positions added last month. Large businesses consisting of 500 employees or more added 70,000 jobs. Within that figure, businesses employing 500 to 999 people gained 11,000 jobs, and companies with 1,000 or more employees added 58,000 jobs.
“The labor market continues to experience uninterrupted growth,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute in a press release. "At this pace of job growth, employers will soon become hard-pressed to find qualified workers."
The service-providing sector—which has anchored the ADP's job report for 11 consecutive months—contributed 84.25 percent (198,000) of February's total job gains. The service-providing sector includes jobs in trade/transportation/utilities; information; financial activities; professional and business services; education and health; leisure and hospitality; and other services. Six of the seven subsectors experienced growth in February, with only the information subsector reporting a decrease of 1,000 jobs. (This is the sixth consecutive month that employment in the information subsector has decreased.)
The professional and business services subsector—which includes architecture and engineering firms—has been on an upward trajectory since March. Employment in the subsector continued to grow last month, with the addition of 46,000 jobs, accounting for 23.2 percent of all service-providing sector jobs added in January.
“We see persistent gains across most industries with leisure and hospitality and retail leading the way as consumer spending kick[s] up,” Yildirmaz said.
The goods-producing sector, which includes jobs in natural resources and mining, construction, and manufacturing, added 37,000 jobs in February. Employment in the sector has continued to improve since June 2017, when the sector reported net-zero job growth due to significant losses in construction employment. Employment in the construction subsector increased by 21,000 in February, accounting for 56.7 percent of all jobs added in the goods-producing sector last month. Employment in the natural resources/mining subsector was modest, with the addition of 2,000 employees during February, while the manufacturing subsector added 14,000 new positions.
ADP's national employment report is often used as a precursor for the monthly Bureau of Labor Statistics (BLS) jobs report, which will release its February edition on Friday.
For more information, read the full employment report from ADP.