ADP National Employment Report: Private Sector Employment Increased by 140,000 Jobs in February; Annual Pay was Up 5.1%

Rhea-AI Summary

The February ADP National Employment Report reveals an increase of 140,000 jobs with a 5.1% annual pay rise. Job gains are solid, while pay gains are above inflation. The report provides insights into private employment changes by sector, region, and establishment size.

Insights

Economist

The recent ADP National Employment Report indicating a 140,000 job increase in the private sector for February and a 5.1 percent year-over-year rise in annual pay reflects a sustained, albeit moderate, growth in employment. This data is crucial for understanding the labor market dynamics and assessing economic health. It suggests that despite potential headwinds, the U.S. job market remains resilient, with steady job creation across various sectors.

The report also highlights a 7.6 percent wage increase for job-changers, which could signal a competitive job market where workers have leverage to negotiate higher pay when moving between jobs. This trend could contribute to inflationary pressures as businesses may pass on the cost of higher wages to consumers. However, the deceleration in pay gains for job-stayers to 5.1 percent, the lowest since August 2021, could indicate a cooling in wage growth that may relieve some inflation concerns.

From a macroeconomic perspective, these findings provide context for the Federal Reserve's monetary policy decisions. The labor market's strength, without significant wage-push inflation, may suggest that there is room for a cautious approach to interest rate adjustments. The report's implications on consumer spending, business investment and overall economic growth are significant, as employment and wage trends are key drivers of these economic activities.

Market Research Analyst

The data presented in the ADP National Employment Report offers valuable insights for businesses and investors. The sector-specific job growth, with goods-producing sectors adding 30,000 jobs and service-providing sectors adding 110,000 jobs, indicates where consumer demand and business investment are likely to be directed. For instance, the notable increase in the leisure/hospitality sector suggests a recovery in consumer confidence and discretionary spending.

The regional breakdown of job changes, with the West leading in job creation, could inform regional investment strategies and operational decisions for businesses looking to expand or optimize their workforce. Additionally, the differentiation in job growth between establishment sizes—small, medium and large—provides a nuanced view of the labor market that can influence business planning and talent acquisition strategies.

Understanding the dynamics of job-changers' pay gains is also essential for businesses to remain competitive in attracting talent. The rise to 7.6 percent from 7.2 percent may necessitate a review of compensation packages. For investors, these trends can impact company valuations as labor costs are a significant factor in profitability forecasts.

Financial Analyst

The ADP report's release can have a tangible impact on financial markets, as it provides a snapshot of employment trends ahead of the official government jobs report. Strong employment growth coupled with moderate wage increases can be seen as a positive signal for equity markets, reflecting a stable economic environment conducive to corporate earnings growth.

The report's findings can also influence bond markets as they affect expectations of inflation and interest rate movements. The nuanced data on pay gains, both for job-stayers and job-changers, allows for a more informed analysis of wage inflation, which is a critical component of overall inflation and thus of interest rate policy. The report's implications may also extend to currency markets, as employment and wage data are key indicators of economic strength, which can affect the value of the dollar.

For investors, the report can inform portfolio allocation decisions. A robust job market might lead to increased consumer spending and higher demand for goods and services, which could benefit consumer-facing sectors. Conversely, sectors that are not experiencing as much job growth might warrant a more cautious approach.

ROSELAND, N.J., March 6, 2024 /PRNewswire/ -- Private sector employment increased by 140,000 jobs in February and annual pay was up 5.1 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 ADP National Employment Report is an independent measure and high-frequency view of the private-sector labor market based on actual, anonymized payroll data of more than 25 million U.S. employees.

The jobs report and pay insights use ADP's fine-grained anonymized and aggregated payroll data to provide a representative picture of the private-sector labor market. The report details the current month's total private employment change, and weekly job data from the previous month. Because the underlying ADP payroll databases are continuously updated, the report provides a high-frequency, near real-time measure of U.S. employment. This measure reflects the number of employees on ADP client payrolls (Payroll Employment) to provide a richer understanding of the labor market. ADP's pay measure uniquely captures the earnings of a cohort of almost 10 million employees over a 12-month period.

"Job gains remain solid. Pay gains are trending lower but are still above inflation," said Nela Richardson, chief economist, ADP.  "In short, the labor market is dynamic, but doesn't tip the scales in terms of a Fed rate decision this year."

February 2024 Report Highlights*

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

JOBS REPORT

Private employers added 140,000 jobs in February
While employment growth remained steady, pay gains for job-changers accelerated for the first time in more than a year, rising to 7.6 percent from 7.2 percent.

Change in U.S. Private Employment:     140,000

Change by Industry Sector

- Goods-producing:     30,000

• Natural resources/mining     -4,000
• Construction     28,000
• Manufacturing     6,000

- Service-providing:     110,000

• Trade/transportation/utilities     24,000
• Information     -2,000
• Financial activities     17,000
• Professional/business services     5,000
• Education/health services     11,000
• Leisure/hospitality     41,000
• Other services     14,000

Change by U.S. Regions

- Northeast:     20,000

• New England     6,000
• Middle Atlantic     14,000

- Midwest:     39,000

• East North Central     32,000
• West North Central     7,000

- South:     37,000

• South Atlantic     35,000
• East South Central     -13,000
• West South Central     15,000

- West:     42,000

• Mountain     7,000
• Pacific     35,000

Change by Establishment Size

- Small establishments:     13,000

• 1-19 employees     11,000
• 20-49 employees     2,000

- Medium establishments:     69,000

• 50-249 employees     53,000
• 250-499 employees     16,000

- Large establishments:     61,000

• 500+ employees     61,000

PAY INSIGHTS

Pay gains for job-changers rose in February
For job-changers, year-over-year pay gains were 7.6 percent, up from the prior month and the first increase since November 2022. Pay gains for job-stayers continued to decelerate, reaching 5.1 percent, the smallest gain since August 2021.

Median Change in Annual Pay (ADP matched person sample)

- Job-Stayers     5.1%

- Job-Changers     7.6%

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

- Goods-producing:                                                       

• Natural resources/mining     4.5%
• Construction     5.5%
• Manufacturing     4.8%

- Service-providing:                                               

• Trade/transportation/utilities     4.6%
• Information     4.8%
• Financial activities     5.5%
• Professional/business services     5.1%
• Education/health services     5.7%
• Leisure/hospitality     5.9%
• Other services     5.5%

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

- Small firms:                                                                

• 1-19 employees     4.4%
• 20-49 employees     5.2%

- Medium firms:                                                             

• 50-249 employees     5.4%
• 250-499 employees     5.3%

- Large firms:                                                                

• 500+ employees     5.1%

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 107,000 to 111,000. 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 2024 ADP National Employment Report will be released at 8:15 a.m. ET on April 3, 2024.

About the ADP® National Employment Report^TM
The ADP National Employment Report is an independent measure 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 © 2024 ADP, Inc. All rights reserved.

ADP-Media

 

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SOURCE ADP, Inc.

FAQ

How many jobs were added in February according to the ADP National Employment Report?

Private employers added 140,000 jobs in February according to the ADP National Employment Report.

What was the percentage increase in annual pay year-over-year?

Annual pay was up by 5.1 percent year-over-year according to the February ADP National Employment Report.

What did the job gains and pay insights reveal?

Job gains were solid, and pay gains were above inflation according to the report.

Which industries saw the highest job changes?

The leisure/hospitality sector saw the highest job changes with an increase of 41,000 jobs.

What was the median change in annual pay for job-stayers in the education/health services sector?

The median change in annual pay for job-stayers in the education/health services sector was 5.7 percent.