Private Employers Add Fewer Jobs in February Than Forecast

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Private Employers Add 139,000 Jobs, ADP Survey Shows
M. Spencer Green/AP

By Jeanna Smialek

Companies added fewer workers than projected in February, a sign that U.S. employers were waiting for a pickup in demand before boosting headcount, a private report based on payrolls showed today.

The 139,000 increase in employment followed a revised 127,000 gain in January that was weaker than initially reported, the weakest two months since August-September 2012, according to the ADP Research Institute in Roseland, N.J. The median forecast of 39 economists surveyed by Bloomberg called for a 155,000 advance.

Harsh winter weather conditions, which kept some shoppers away from stores and car dealerships, help explain why companies were hesitant to accelerate hiring at a more robust pace. Faster payroll growth that spurs bigger wage gains would help to boost the consumer purchases that make up almost 70 percent of the economy.

"Employment was weak across a number of industries," Mark Zandi, chief economist at Moody's Analytics in West Chester, Pa., said in a statement. Moody's produces the figures with ADP (ADP). "Bad winter weather, especially in mid-month, weighed on payrolls. Job growth is expected to improve with warmer temperatures."

Estimates in the Bloomberg survey of economists ranged from gains of 100,000 to 180,000 after a previously reported increase of 175,000 in January.
Missing Mark

ADP's numbers have missed the mark in tracking the government's jobs figures over the past couple of months. %VIRTUAL-article-sponsoredlinks%The group's initial estimates showed a 238,000 gain in employment for December followed by a 175,000 January increase. That compares with the Labor Department's initial estimate of an 87,000 gain in December private payrolls and a 142,000 increase in January.

Stock-index futures were little changed after the report. The contract on the Standard & Poor's 500 index (^GSPC) expiring this month rose less than 0.1 percent to 1,872 at 9:06 a.m. in New York.

Payrolls at goods-producing industries increased headcount by 19,000. Factories added 1,000 workers, while construction companies took on 14,000. Service providers climbed by 120,000 jobs in February, led by professional and business service providers.

Companies employing 500 or more workers added 44,000 jobs. Medium-sized businesses, with 50 to 499 employees, took on 35,000 workers and small companies expanded payrolls by 59,000.
Jobs Numbers

A Labor Department report scheduled for release on March 7 may show that private payrolls rose by 154,000 last month, according to the Bloomberg survey median. Total payrolls, which include government jobs, probably rose 150,000 after a 113,000 gain in January, based on the Bloomberg survey median.

"The very cold weather is playing havoc on all the economic data," Zandi said in an interview on CNBC. The group's estimates aren't affected by the weather, so the Labor Department's figures could come in even weaker than the ADP figures, he said.

ADP's data are based on the number of people on their customers' payrolls, while the Labor Department's figures are based on the number of workers receiving pay for the period covered by the agency's survey week that includes the 12th of the month.

The week ended Feb. 15 was the coldest second week of February since 2011, according to weather-data provider Planalytics. The South Atlantic region of the U.S. experienced the most snowfall since 1983 and New England registered the most snow in 20 years, the Berwyn, Pa.-based firm said. The colder temperatures and winter storms followed the chilliest January in three years.

Warmer Weather

In areas where weather has been less of a factor, demand has held up, according to Kevin Mansell, chief executive officer at clothing and home goods retailer Kohl's (KSS).

"Frankly our West Coast business, which has had good weather particularly for spring selling, has performed really well," Mansell said in a Feb. 27 conference call. "That gives us a lot of optimism," he said, "once there's more reasonable weather in particularly the Midwest and Northeast."

Winter's effect on the homebuilding industry may temper construction hiring. Housing starts fell 16 percent in January to an 880,000 annualized rate, according to data from the Commerce Department issued Feb. 19.

Verizon Communications' (VZ) wireless division is among those adding to employee rosters. The company is bringing on 98 customer specialist and retail jobs in South Carolina before April 1, it announced in a release this week.

9 Numbers That'll Tell You How the Economy's Really Doing
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Private Employers Add Fewer Jobs in February Than Forecast
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.

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