The U.S. private sector added 139,000 jobs in February on a seasonally adjusted basis, according to ADP’s National Employment Report. Many U.S. regions struggled with bad weather, likely a factor for the February report which fell below the previous 12-month average increase of 186,000. While overall the U.S. unemployment rate has been steadily decreasing over the last 24 months, ending January at 6.6%, the weak February private sector data suggests a slight slowdown in the rate of improvement may be occurring.
In the Goods segment, which accounts for 16.4% of total private employment, Construction showed an increase of 0.23% adding 14,000 jobs, seasonally adjusted, as housing continues to be a leading contributor to U.S. market improvements and GDP. In the previous three months, housing-related stocks have continued to climb shown by improvements in the SPDR S&P Homebuilders ETF which gained 7.13%.
Jobs in the Manufacturing sector also rose by 5,000 seasonally adjusted in February bringing total Goods-producing sector jobs to an increase of 19,000.
In Services, which accounts for the remaining percentage of private employment, Financial sector jobs continued to descend. The sector pared 2,000 jobs in February on a seasonally-adjusted basis, following a decrease of 8,000 jobs in January. Financial sector stocks have been improving over the past three months with the Dow Jones U.S. Financial Services Index increasing 4.35% and component JPMorgan adding 5.11%. Financial sector job growth, however, continues to remain relatively flatlined as the sector still deals with tightened mortgage lending and a focus on regulatory reporting transparency.
Professional and Business Services job growth led the Services segment in February adding 33,000 jobs, an increase of 0.18%. Trade, Transportation and Utilities was also up in February adding 31,000 jobs to the Services industry, an increase of 0.12%.
Small Business employment, also highlighted in the ADP report, showed a total increase of 59,000 jobs from employers with one to 49 employees. Small businesses in the Services segment added the majority of jobs in February at 52,000.
The Dow Jones Industrial Average was up 0.16% in the day following the ADP National Employment Report and has gained 2.67% over the last three months.
U.S. employment is a key factor for the Federal Reserve’s Federal Open Market Committee (FOMC) in determining monetary policy. The FOMC’s next meeting is March 18 to 19. While the private sector is only a portion of the labor market overall, the weak February report signals improvement estimates may be inflated; however, economists still expect the FOMC to continue tapering in March since overall unemployment has been trending towards the Fed’s goal of 6.5%.