Payrolls grew by 298,000 last month — the most in 3 years, ADP reports

Construction workers
The hiring boom was led by 66,000 new construction jobs, the biggest increase in 11 years. Above, people work on a Los Angeles rail system connector.
(Mel Melcon / Los Angeles Times)

U.S. businesses added the most jobs in three years last month, a private survey found. That’s a sign that hiring may be accelerating from last year’s modest levels.

Payroll processor ADP said Wednesday that businesses added 298,000 jobs in February, up from 261,000 the previous month. The gains were led by the construction industry, which tallied 66,000 more jobs, the biggest increase in 11 years, and 32,000 manufacturing jobs, the biggest increase in five years.

The hiring boom in construction probably was driven by unseasonably warm weather in much of the country. Construction sites typically shut down in snow or freezing weather. Still, job gains were broad-based and suggest that increased business optimism may have led to more hiring. January and February’s job gains are above last year’s average of about 185,000 per month.

“February proved to be an incredibly strong month for employment with increases we have not seen in years,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.


Measures of business confidence have jumped since the November election, and the stock market has reached record highs in anticipation of President Trump’s promised tax cuts and deregulation. Investors are also optimistic, with more evidence emerging of economic growth overseas, including Europe.

The ADP survey covers only private businesses and often diverges from official figures. Economists forecast that the government’s jobs report, due out Friday, will show an increase of 186,000, according to data provider FactSet.

In recent months, after a change in ADP’s methodology, its figures have gotten closer to the government’s reported data. It was off by 9,000 in January and 8,000 the previous month.

Some economists are revising higher their forecasts for Friday’s jobs report in the wake of the ADP figures. Ted Wieseman, an economist at Morgan Stanley, now expects job gains of 250,000, up from 200,000.


Other signs point toward a healthy job market, Wieseman noted in an email. The number of people seeking unemployment benefits, a proxy for layoffs, has fallen to a 44-year low. And surveys of manufacturing and services firms in the last two months show greater interest in hiring.

The government’s Friday report will be the final major economic data that Federal Reserve officials will see before their March 14-15 meeting, when they are widely expected to raise short-term interest rates for the third time in nearly a decade.

A rate increase will be even more likely if the government’s data reflect strong hiring similar to the ADP report. Many economists say job gains would have to plummet to roughly 50,000 or less to give the Fed pause.


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