Private sector hiring improved in February but remained narrowly concentrated, according to data from the ADP National Employment Report released Wednesday, March 4. Employers added a seasonally adjusted 63,000 jobs last month, exceeding the Dow Jones consensus estimate of 48,000 and the Fox Business forecast of 50,000. However, the gains were almost entirely driven by just two sectors — education and health services, which contributed 58,000 positions, and construction, which added 19,000 — masking persistent weakness elsewhere.
January's initially reported figure of 22,000 jobs was revised sharply lower to just 11,000, further underscoring the fragility of recent hiring trends. Professional and business services shed 30,000 positions in February, manufacturing lost 5,000 jobs, and trade, transportation and utilities declined by 1,000. By firm size, small businesses — those with fewer than 50 employees — accounted for virtually all the gains, adding 60,000 jobs, while medium-sized businesses lost 7,000 workers and large businesses added only 10,000.
Annual pay growth for job-stayers held steady at 4.5% year-over-year, unchanged from January, while pay growth for job-changers slowed to 6.3% from 6.4%. ADP Chief Economist Nela Richardson noted that hiring concentration and a record-low job-switching premium are signaling a labor market in which workers have diminishing leverage. "With hiring concentrated in only a few sectors, our data shows no widespread pay benefit from changing jobs. In fact, the pay premium for switching employers hit a record low in February," Richardson said.
The February ADP data arrives against a challenging macroeconomic backdrop. Escalating conflict in the Middle East has driven crude oil prices sharply higher, rekindling fears of a second inflation wave that could further delay Federal Reserve interest rate cuts. Traders have pushed back their expectations for the next Fed easing to at least July 2026, with the probability of a second cut this year falling materially, according to CME FedWatch data.
Raymond James economists Eugenio Alemán and Giampiero Fuentes said the February ADP improvement is a positive indicator for Friday's nonfarm payrolls release from the Bureau of Labor Statistics, though they cautioned that ADP revised total employment growth downward by a net 159,000 jobs going back to October 2025. Wall Street consensus for Friday's BLS report stands at a gain of roughly 50,000 nonfarm positions, which would represent one of the weakest monthly readings in several years. For context, private employers added a total of only 398,000 jobs across all of 2025, down sharply from 771,000 in 2024, reflecting a multi-year deceleration in labor market activity.
Financial markets showed a measured reaction to the ADP data. ADP's own shares (NASDAQ: ADP) gained 0.6% on the session, while peer software companies posted mixed returns. Economists and market participants are treating the ADP figures as a directional signal rather than a decisive market mover, reserving judgment ahead of Friday's comprehensive government payrolls release, which includes public-sector employment and tends to carry greater weight with Fed policymakers.