Hiring at US companies slowed in February to the lowest pace since July, led by job cuts in the service sector and in regions of the US that were hit by severe weather.
Private-sector payrolls increased by 77,000 in February, down from a revised 186,000 in January, according to ADP Research, below all but one forecast in a Bloomberg survey.
Wednesday’s figures add to other recent data pointing to a slowdown in the labor market. Applications for unemployment benefits in the most recent period reached the highest level this year amid a growing number of job cuts at companies including federal contractors.
US Treasury yields and the dollar fell after the release while stock futures remained higher.
“Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month,” Nela Richardson, chief economist at ADP, said in a statement. “Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead.”
Most of the job cuts were in the services sector, with trade, transportation and utilities as well as education and health care registering the biggest declines. Goods-producing employment rose by 42,000, the most since October 2022.
A regional breakdown suggested inclement weather may have played a role in the sharp deceleration in overall employment, with the South and West seeing outright reductions in headcount. By business size, those with less than 20 employees were the only ones to see cuts.
A monthly University of Michigan survey suggests consumers are increasingly concerned about a rise in unemployment over the next year. The Federal Reserve is watching for signs of deterioration as it tries to balance supporting the labor market with controlling inflation.
The ADP report, published in collaboration with the Stanford Digital Economy Lab, showed wage growth was little changed. Workers who changed jobs saw a 6.7% increase in pay, while those who stayed put saw a 4.7% gain. ADP bases its findings on payrolls covering more than 25 million US private-sector employees.
A monthly employment report due Friday is expected to show job growth, including government positions, picked up in February. Data for the report was collected prior to many of the recent cuts that the Trump administration undertook as part of its pledge to shrink the federal government.
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