According to payroll company ADP, US firms increased their hiring rate in February, which is another sign that additional measures may be required to slow down the world’s largest economy.
According to the most recent ADP data, the private sector added 242,000 jobs in February, over twice the revised figure of 119,000 for January and far more than economists had predicted.
This comes after a string of recent indicators suggesting that, despite the Federal Reserve’s efforts to contain price increases, hiring remained robust, consumer spending sturdy, and inflation persistent.
Nela Richardson, chief economist at ADP, said in a statement: “We’re seeing robust hiring, which is excellent for the economy and workers, but wage growth is still extremely elevated.
According to the study, wage growth slowed to 7.2 percent in February from a year earlier, and the percentage of workers who changed occupations also decreased to 14.3 percent.
Richardson issued a warning: “The small reduction in wage rises, on its own, is unlikely to drive down inflation substantially in the near-term.
The US central bank has raised interest rates eight times since early last year in an effort to reduce the pace of rising inflation while avoiding sending the economy into a recession.
Fed Chair Jerome Powell issued a warning on Tuesday, saying that if necessary, policymakers are ready to increase rate hikes and raise rates higher than anticipated in order to tame inflation and the booming labor market.
“Solid” gains
According to the ADP report, “job increases are steady and salary growth is elevated” on Wednesday.
The service sector, particularly leisure and hospitality, as well as financial activities saw the majority of job growth last month.
ADP said that small companies are “a particular area of difficulty,” considering that this group has shed jobs every month since August 2022.
Experts warn against extrapolating too far, though, because the data can vary from official figures.
According to Rubeela Farooqi, chief US economist at High Frequency Economics, the figures for the private sector’s share of payrolls in Friday’s government data release appear stronger than anticipated for the time being.
Payrolls should continue to be favorable for the time being, she noted. Yet as the Fed raises rates even more into repressive territory, the pace should halt.
In an effort to prevent rising service prices and more persistent price hikes, policymakers had been monitoring pay increases as businesses raced to hire and keep workers.
