ADP National Employment Report: Private Sector Employment Increased by 242,000 Jobs in February; Annual Pay was Up 7.2%

Rhea-AI Summary

On March 8, 2023, ADP reported a rise of 242,000 jobs in private sector employment for February, with annual pay up 7.2% year-over-year. The report, derived from over 25 million U.S. employee payroll records, indicates strong job growth despite a slight decrease in wage growth. Nela Richardson, ADP's chief economist, noted that while hiring remains robust, elevated pay growth may not significantly curb inflation in the near term. The report highlights industry-level job changes, regional differences, and employment trends by establishment size.

Positive

• Private sector employment increased by 242,000 jobs in February.
• Annual pay growth was up 7.2% year-over-year.
• Strong job gains reported, indicating positive economic trends.
• Large establishments added 160,000 jobs, showing strength in major companies.

Negative

• Small establishments shed 61,000 jobs, continuing a trend of job losses since August 2022.
• Job growth is concentrated in larger firms, indicating potential weaknesses in small business hiring.

ROSELAND, N.J., March 8, 2023 /PRNewswire/ -- Private sector employment increased by 242,000 jobs in February and annual pay was up 7.2 percent year-over-year, according to the February ADP^® National Employment Report^TM produced by the ADP Research Institute^® in collaboration with the Stanford Digital Economy Lab ("Stanford Lab").

The jobs report and pay insights use ADP's fine-grained anonymized and aggregated payroll data of over 25 million U.S. employees to provide a representative picture of the labor market. The report details the current month's total private employment change, and weekly job data from the previous month. ADP's pay measure uniquely captures the earnings of a cohort of almost 10 million employees over a 12-month period.

"There is a tradeoff in the labor market right now," said Nela Richardson, chief economist, ADP.  "We're seeing robust hiring, which is good for the economy and workers, but pay growth is still quite elevated. The modest slowdown in pay increases, on its own, is unlikely to drive down inflation rapidly in the near-term."

February 2023 Report Highlights*

View the ADP National Employment Report and interactive charts at www.adpemploymentreport.com.

Jobs Report

Private employers added 242,000 jobs in February
Job gains are solid and wage growth remains elevated. A particular area of weakness is with small establishments, which shed jobs every month since August 2022.

Change in U.S. Private Employment:     242,000

Change by Industry Sector

- Goods-producing:     52,000

• Natural resources/mining     25,000
• Construction     -16,000
• Manufacturing     43,000

- Service-providing:     190,000

• Trade/transportation/utilities     3,000
• Information     9,000
• Financial activities     62,000
• Professional/business services     -36,000
• Education/health services     35,000
• Leisure/hospitality     83,000
• Other services     34,000

Change by U.S. Regions

- Northeast:     37,000

• New England     2,000
• Middle Atlantic     35,000

- Midwest:     -12,000

• East North Central     -35,000
• West North Central     23,000

- South:     94,000

• South Atlantic     40,000
• East South Central     35,000
• West South Central     19,000

- West:     128,000

• Mountain     29,000
• Pacific     99,000

Change by Establishment Size

- Small establishments:     -61,000

• 1-19 employees     -56,000
• 20-49 employees     -5,000

- Medium establishments:     148,000

• 50-249 employees     77,000
• 250-499 employees     71,000

- Large establishments:     160,000

• 500+ employees     160,000

Pay Insights

Pay growth slowed in February
Pay growth for job stayers slowed to 7.2 percent in February, the slowest pace of gains in 12 months. Pay growth decelerated for job changers, too, falling to 14.3 percent from 14.9 percent.

Median Change in Annual Pay (ADP matched person sample)

- Job-Stayers     7.2%

- Job-Changers     14.3%

Median Change in Annual Pay for Job-Stayers by Industry Sector

- Goods-producing:                                                       

• Natural resources/mining     7.8%
• Construction     7.1%
• Manufacturing     7.1%

- Service-providing:                                               

• Trade/transportation/utilities     7.4%
• Information     6.5%
• Financial activities     7.3%
• Professional/business services     6.5%
• Education/health services     7.2%
• Leisure/hospitality     10.1%
• Other services     6.8%

Median Change in Annual Pay for Job-Stayers by Firm Size

- Small firms:                                                                

• 1-19 employees     5.6%
• 20-49 employees     7.1%

- Medium firms:                                                             

• 50-249 employees     7.5%
• 250-499 employees     7.4%

- Large firms:                                                                

• 500+ employees     7.5%

To see Pay Insights by U.S. State, Gender, and Age for Job-Stayers, visit here:

* Sum of components may not equal total, due to rounding.

The January total of jobs added was revised from 106,000 to 119,000. The historical data file, and weekly data for the previous month, is available at https://adpemploymentreport.com/.

To subscribe to monthly email alerts or obtain additional information about the ADP National Employment Report, including employment and pay data, interactive charts, methodology, and a calendar of release dates, please visit https://adpemploymentreport.com/.    

The March 2023 ADP National Employment Report will be released at 8:15 a.m. ET on April 5, 2023.

About the ADP® National Employment Report^TM
The ADP National Employment Report is an independent estimate of the change in U.S. private employment and pay derived from actual, anonymized payroll data of client companies served by ADP, a leading provider of human capital management solutions. The report is produced by ADP Research Institute in collaboration with the Stanford Digital Economy Lab.

The ADP National Employment Report is broadly distributed to the public each month, free of charge, as part of the company's commitment to offering deeper insights of the U.S. labor market and providing businesses and governments with a source of credible and valuable information.

About the ADP Research Institute®
The ADP Research Institute delivers data-driven discoveries about the world of work and derives reliable economic indicators from these insights. We offer these findings as a unique contribution to making the world of work better and more productive by delivering actionable insights to the economy at large.

About ADP (NASDAQ – ADP)
Designing better ways to work through cutting-edge products, premium services and exceptional experiences that enable people to reach their full potential.  HR, Talent, Time Management, Benefits and Payroll. Informed by data and designed for people.   Learn more at ADP.com

ADP, the ADP logo, and Always Designing for People, ADP National Employment Report, and ADP Research Institute are registered trademarks of ADP, Inc. All other marks are the property of their respective owners.

Copyright © 2023 ADP, Inc. All rights reserved.

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SOURCE ADP, Inc.

FAQ

What was the job growth reported by ADP for February 2023?

ADP reported an increase of 242,000 jobs in private sector employment for February 2023.

How much did annual pay increase according to ADP's February report?

Annual pay increased by 7.2% year-over-year as reported in February 2023.

What sectors saw job gains in February 2023 according to ADP?

Job gains were observed in goods-producing sectors (+52,000) and service-providing sectors (+190,000).

What challenges are small establishments facing as per the ADP report?

Small establishments lost 61,000 jobs, marking ongoing job losses since August 2022.

What insights did Nela Richardson provide regarding the labor market?

Nela Richardson stated that while hiring is strong, elevated pay growth may not lead to a quick decrease in inflation.