Private sector job creation slowed to the krawl in February, raising concerns about a slowdown, pay processing company ADP reported Wednesday.
ADP seasonally adjusted figures show that businesses are well below the Dow Jones Consensus estimates of 186,000 and 148,000 people revised upward in January.
The total is the smallest increase since July, when economic growth is slowing and fears that President Donald Trump’s tariff plans will cause another inflation. The ADP said annual salary rose 4.7% in February, the same as the previous month.
Stock market futures lost some of their profits after the release while Treasury yields were mixed.
“Policy uncertainty and slower consumer spending could have led to slower layoffs and jobs last month,” said Nella Richardson, ADP chief economist. “Our data is combined with other recent indicators, suggesting employers’ reluctance to hire when assessing the prior economic situation.”
While most economic data points remain positive, sentiment metrics show a growing fear among both executives and consumers that Trump’s tariffs could raise prices and slow growth. In extreme scenarios, this combination can result in bulls, flat or negative growth conditions, and price increases.
The ADP report reflects some of these concerns as the sector that brings together trade, transportation and utility jobs has lost 33,000 positions. Education and health services reported a 28,000 decline, but for AI-related businesses, information services fell 14,000 at the time of uncertainty, despite Trump’s commitment to moving forward with AI initiatives.
On the positive side, leisure and hospitality jobs jumped 41,000 times, while professional and business services added 27,000, while financial activities and construction both benefited 26,000 people. The manufacturing industry also reported an increase of 18,000, countering the month’s ISM manufacturing survey, which showed companies were pulling jobs back.
Services and product production have a different balance between the month, with 36,000 and 42,000 added for that month, respectively. As the US is a service-based economy, that side is usually dominant in job creation.
Employment growth was leaning towards larger companies in February, with over 500 workers reporting profits of over 37,000 and under 50 employees seeing losses of 12,000.
The ADP count will serve as a precursor to the Labor Bureau’s Bureau of Labor Statistics report on non-farm pay on Friday. However, the two reports may differ significantly due to different methodologies. In January, BLS reported just 111,000 increases in private pay, well below ADP count.
Economists surveyed by Dow Jones predicted Friday’s report showed a steady 4% unemployment rate with 170,000 jobs increase and unemployment rates.