- The private sector added 475,000 jobs in February, according to ADP.
- Jobs were solid across industries, but the smallest firms lost jobs.
- PNC expects job growth of 400,000 in the government’s February jobs report on Friday.
The private sector added 475,000 jobs in February, according to a report based on records from payroll-processing firm ADP.
The gains were concentrated at the largest businesses. Firms with 500 or more employees added 552,000 jobs in February, while those with 50 to 499 employees added 18,000 jobs. Employment fell by 96,000 at firms with fewer than 50 employees. It could be that with the tight labor market, workers are leaving smaller businesses to work for larger ones for better opportunities.
Employment rose by 57,000 at goods-producing businesses, with solid growth in both manufacturing (+30,000) and construction (+26,000). Job growth was 417,000 in service-providing industries, including 170,000 in leisure/hospitality services, which continues to recover from the pandemic. There were also big gains in trade/transportation/utilities (+98,000) and professional/business services (+72,000).
The good ADP report is consistent with PNC’s forecast for February employment growth of 400,000 when the Bureau of Labor Statistics releases the government’s official jobs report for February on Friday. That includes private sector gains of 390,000, and government job growth of 10,000. PNC expects the unemployment rate to fall from 4.0% in January to 3.8% in February.
The US labor market continues to recover from the Viral Recession. The economy lost 22 million jobs in March and April 2020 and has since added back about 19 million of those jobs. But employment in January was still down by about 3 million from its pre-pandemic peak. With continuing solid job growth, PNC expects employment to reach a new peak this fall.
One big concern is the availability of labor. The labor force is now smaller, by about 1 million, than it was before the pandemic. This is due to a combination of early retirements, concern about the coronavirus, family responsibilities, and increased government assistance. The smaller labor force is making it difficult for firms to hire, and it may be why employment fell at the smallest businesses in the ADP report.
The other wild card is the Ukraine-Russia conflict. PNC expects little fallout on the US labor market, but there are major downside risks in the months ahead. These include a recession in Europe, even higher inflation because of rising energy prices, and the increasing likelihood that the Federal Reserve could be forced to raise interest rates so aggressively to combat inflation that the recovery stalls.
The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.