Private sector employment grew by nearly 300,000 last month, according to payroll giant ADP, in another strong sign for the economy.
The private sector added 298,000 jobs in February, including 104,000 at small businesses. That total included 51,000 jobs at small businesses with between one and 19 employees, and 53,000 at small businesses with between 20 and 49 employees. Medium-size companies with between 50 and 499 employees added 122,000 jobs in February. Large companies added 72,000 jobs, including 28,000 at businesses with between 500 and 999 employees and 43,000 jobs at businesses with 1,000 employees or more.
The goods-producing sector added 106,000 jobs in February, while the service sector added 193,000. The service jobs included 66,000 in professional and business services, such as accounting and tax, along with 4,000 in financial activities, such as banking. Franchise businesses added 17,100 jobs in February.
“It was a blowout number, close to 300K,” said Mark Zandi, chief economist at Moody’s Analytics, which compiles the monthly national employment with ADP. “That’s three times the rate of monthly job growth necessary to absorb the growth in the working age population. That means any slack that is still remaining in the labor market is rapidly being absorbed. We’re going from a labor market that a few years ago was plagued by unemployment and underemployment, and you can characterize it as being at full employment. If the trend lines continue and we continue to create jobs at this pace, then the economy and the labor market will be very, very tight.”
He noted that job growth was broad based and there has even been some growth in the mining and energy sector, which had lost jobs in recent years because of the decline in oil prices. “We saw a pretty significant downdraft in that sector for a substantive period, but that now appears to be over,” said Zandi.
He expects the job numbers that come out Friday from the U.S. Bureau of Labor Statistics to be similarly robust, and that could influence the Federal Reserve’s timing on increasing interest rates. Zandi is also seeing signs of improvement in the global economy also helping boost jobs in the U.S. The policies of the Trump administration, with expectations for tax reform and regulatory reform, are also improving business confidence.
“The post-election bounce is still evident in the financial markets, and that’s now showing up to some degree in the labor market as well,” said Zandi.