US private sector added 475,000 jobs better than expected in February as COVID cases plummet

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The U.S. private sector posted healthy job growth in February as the Omicron wave eased, according to new economic data.

The private sector payroll rose by 475,000 last month, ADP said in its monthly employment report Wednesday morning. Economists polled by Bloomberg had expected a gain of 378,000 private jobs. The reading shows job creation slowing slightly from January’s increase of 509,000 jobs. That tally was revised from an initial reading that showed the private sector cut 301,000 jobs during the month.

In February, the economic situation generally improved as the high number of virus cases seen at the start of the new year began to subside. Daily infections totaled around 108,000 at the end of last month, up from around 662,000 at the end of January. The rapid decline has already prompted many state and local governments to ease the economic restrictions maintained by the Delta and Omicron waves.

The leisure and hospitality sector again accounted for the bulk of the month’s gains, with these companies adding 170,000 new jobs during the month. Trade, transportation and utilities companies followed with a gain of 98,000 jobs. Natural resource and mining companies gained just 2,000 jobs, the smallest gain of any sector.

With regard to company size, only large companies recorded significant increases in the number of employees. Companies with more than 500 employees created 552,000 jobs in February, according to ADP.

Conversely, businesses with less than 50 people lost 96,000 jobs, signaling that smaller businesses found it much harder to rehire even as the virus situation normalized.

Economists shouldn’t worry about the drop just yet, said Ian Shepherdson, chief economist at Pantheon Macroeconomics, on Wednesday. It “makes no sense to care” about the initial ADP print, especially after the January sum was revised so significantly. Just as ADP’s latest report showed January’s numbers were much better than originally reported, the revised February tally, due out in April, could make the initial data “meaningless,” Shepherdson said.

ADP’s latest release also follows an extremely encouraging jobs report in January. Government data released last month showed that the United States adding 467,000 off-farm jobs in the first month of 2022, contrasting sharply with the decline in the previous ADP report. Positive revisions to November and December jobs gains also signaled that the Omicron wave had little effect on slowing hiring despite the number of cases hitting record highs.

The government’s next payroll report is due out on Friday. Economists expect the country to add 400,000 jobs and the unemployment rate to fall to 3.9% from 4%.

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