Private sector added disappointing 139,000 jobs last month, ADP says
Bad winter weather helped put a freeze on the labor market last month, with the private sector adding a disappointing 139,000 net new jobs, payroll processing firm Automatic Data Processing said Wednesday.
The figure, which was below economists’ expectations, does not bode well for the government’s February jobs report coming Friday.
Analysts have been forecasting that the Labor Department data, which cover the private and public sectors, will show a pickup in job growth to about 150,000 last month, after a weak 113,000 in January. The unemployment rate is expected to hold steady at 6.6%.
But the weather can have a bigger effect on the government report than on the ADP data, said Mark Zandi, chief economist of Moody’s Analytics, which assists ADP in its monthly report.
ADP uses private payroll counts. The Labor Department relies in part on a survey of households done in the middle of each month.
A major snowstorm or other weather problems during that week can have an out-sized effect on the government data, Zandi said in a statement.
That could help explain why the ADP job-growth estimates have been significantly higher than the government’s the last three months.
Bad weather was the “foremost reason” for the recent weak jobs data, Zandi said.
“It’s been awfully cold since December in much of the country, and we had a very significant snowstorm/icestorm in the survey week in mid-February that I think is affecting the data,” he said.
“It’s not only affecting ADP data ... but all of the economic data is being weighed down by this weather effect,” Zandi said.
He predicted that the Labor Department would report the economy added 130,000 net new jobs last month.
On Wednesday, ADP also sharply lowered its estimate for January job growth, to 127,000 from an initially reported 175,000. It was the weakest month since August 2012, ADP said.
The revision meant job growth improved somewhat in February. But the figures for the previous two months were well below the average of about 200,000 during the previous year.
The labor market also has been hurt by the expiration of emergency unemployment benefits for millions of Americans and a cut in the food stamps program, Zandi said.
Like the weather, the effect of those program changes probably are temporary as households will adjust to the lower amount of aid, he said.
For that reason, Zandi predicted that private-sector job growth would rebound to about 200,000 a month in the spring and summer.
“In my view, the underlying growth in the economy ... is much stronger than the current data would suggest,” he said.
Your guide to our new economic reality.
Get our free business newsletter for insights and tips for getting by.
You may occasionally receive promotional content from the Los Angeles Times.