Washington (AFP) – US private companies continued to add jobs at a fast clip in February, a trend that could strain the labor market, according to a report Wednesday from payrolls firm ADP.
ADP estimated private sector hiring at 235,000 last month, much above the 190,000 forecast by analysts. The report is closely watched ahead of Friday’s crucial Labor Department monthly jobs report, although the two data sets do not always align.
Hiring stayed robust in the services sector, a linchpin of the US economy, with 198,000 new jobs added in February. Strong gains in leisure and hospitality suggest a positive impact from rising consumer spending, ADP said.
Hiring in construction picked up to 21,000, compared with the 9,000 reported in January. The improvement was more modest in manufacturing employment, which added 14,000, up from 12,000 last month.
“The labor market continues to experience uninterrupted growth,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.
“We see persistent gains across most industries with leisure and hospitality and retail leading the way as consumer spending kicked up. At this pace of job growth employers will soon become hard-pressed to find qualified workers.”
“The job market is red hot and threatens to overheat,” said Mark Zandi, chief economist of Moody’s Analytics. “With government spending increases and tax cuts, growth is set to accelerate.”
The strong figures on private-sector hiring will raise expectations ahead of Friday’s jobs report.
Last month’s strong Labor Department report pointed to higher wage growth, raising expectations that the Federal Reserve would accelerate interest rate hikes to counter inflation. Global stock markets have been volatile since then, in large part due to worries about economic overheating.
Jim O’Sullivan, chief US economist at High Frequency Economics, noted that “ADP is far from infallible for signaling” Friday’s US jobs report
“That said, we expect an above-consensus payrolls reading as well,” he added.