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US private sector posts modest job growth in February

Updated March 05, 2014

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-File Photo
-File Photo

WASHINGTON: US businesses added just 139,000 jobs in February, modest growth due in part to bad winter weather and job losses in financial services, payrolls firm ADP said Wednesday.

Last month's job expansion was well below the average of 186,000 over the prior 12 months. The reading missed expectations of 150,000 net new jobs.

ADP significantly revised downward January's number to 127,000 jobs, from the prior estimate of 175,000.

“February was another soft month for the job market. Employment was weak across a number of industries. Bad winter weather, especially in mid-month, weighed on payrolls,” said Mark Zandi, chief economist of Moody's Analytics, which helps to compile the report.

Employment in financial services fell for the second straight month, by 2,000 in February after 8,000 in January.

Employment in those two months was the weakest in the industry since 2011.

Service providers, the bulk of the US economy, added 120,000 jobs. The goods-producing sector added 19,000 jobs, with construction contributing most of the growth at 14,000.

“Job growth is expected to improve with warmer temperatures,” Zandi said.

The ADP data point to modest job creation numbers when the US Labor Department issues its February jobs report on Friday, analysts said.

“While the ADP has had sizable misses recently, if anything the data suggest downside risk to our already below-consensus 130,000 forecast for payrolls on Friday,” said Jim O'Sullivan, chief US economist at High Frequency Economics.

Analysts on average are forecasting net job creation picked up to 163,000 in February after 113,000 in January. The unemployment rate is expected to dip to 6.5 per cent from 6.6 per cent.

If the jobless rate drops to 6.5 per cent, that would be the lowest since October 2008 and hit the Federal Reserve's threshold for considering tightening monetary policy.

Last week Fed Chair Janet Yellen said the central bank would try to “get a firmer handle” on exactly how much of the recent spate of weaker data can be explained by weather or if any is due to a softer outlook.

Many economists have pointed to the unusually severe winter since December for at least some of the weakness.

The Fed is expected to cut another $10 billion from its asset-purchase program, now at $65 billion a month, at the March 18-19 policy meeting of the Federal Open Market Committee.

But Yellen suggested the US central bank could shift its stimulus tapering policy if recent weaker data represented a fundamental change in growth.