February Private Payrolls Solid, But Moody's Issues Slowdown Warning

U.S. private payrolls were up 183,000 in the month of February, according to the latest report Wednesday from ADP and Moody’s Analytics. The private payroll number was just shy of economist expectations of 185,000, and Moody’s economist Mark Zandl had some potentially troubling commentary about the outlook for U.S. economic growth.

The Numbers

Wednesday’s report wasn’t all bad news. In addition to the solid February number, ADP revised January’s private payroll estimate higher by more than 85,000 to 300,000. U.S. job growth has been robust in recent months, averaging 240,000 nonfarm payroll additions per month since December. The biggest gains in February came from business and professional services (49,000 jobs) education and health services (39,000 jobs) and construction (25,000 jobs).

Overall, service jobs accounted for 139,000 new hires, while goods producers generated 44,000 jobs. Companies with between 50 and 499 employees were doing the most hiring, adding 95,000 positions compared to 77,000 new hires by large businesses. ADP said midsize companies have been responsible for the majority of the job growth in the past year.

The Caveat

Unfortunately, Moody’s economist Mark Zandi said the period of outsized private payroll growth is likely winding down.

“Job gains are still strong, but they have likely seen their high watermark for this expansion,” Zandi said.

Zandi also said he expects first-quarter U.S. economic growth to slow to just 0.3 percent.

Market Reaction

Investors didn’t seem fazed by the payroll numbers or the commentary from Moody’s. The SPDR S&P 500 ETF Trust SPY opened Wednesday’s session up 0.1 percent and was down marginally at the time of publication. 

Investors looking for the next potential economic catalyst will now turn their attention to the Labor Department’s nonfarm payroll number for February, which is due out Friday.

Related Links:

2018 US GDP Growth Highest Since 2005

Powell's Testimony Continues: Inflation Target, Balance Sheet Reduction, Household Debt Concerns