Automatic Data Processing (ADP) said that manufacturing employment increased by 1,000 workers in February, rebounding from the contraction of 7,000 in January. Hiring has been softer the past two months, with poor weather conditions hampering demand and overall activity. As such, it has put a pause on the stronger growth seen at the end of 2013, which should have provided some momentum moving into the new year. Manufacturers added 67,000 net new workers from August to December, according to ADP, which stands in sharp contrast to being essentially flat from January to July of last year.
The good news is that weather challenges are temporary, and manufacturers continue to be mostly upbeat about growth moving forward. Indeed, Mark Zandi, Moody’s Analytics chief economist and the preparer of the ADP report, said, “Job growth is expected to improve with warmer temperatures.”
Looking at the overall figures, ADP reported that 139,000 net new private, nonfarm payroll workers were generated in February. Moreover, the data included some major revisions for last year, lowering nonfarm payroll growth by 128,000 from November to January. The bulk of that downward revision came in December, which was reduced by 100,000. Even with these changes, it is clear that nonfarm payroll growth in January and February has been weak, with hiring below the 187,000 monthly averages seen in 2013.
In February, the largest job gains were seen in the professional and business services (up 33,000); trade, transportation and utilities (up 31,000); and construction (up 14,000) sectors. Small and medium-sized businesses (e.g., those with less than 500 employees) contributed two-thirds of the net new jobs, with the smallest establishments (e.g., those with less than 50 employees) adding 59,000 workers for the month.
The Bureau of Labor Statistics will release official jobs numbers on Friday, and the expectation is for nonfarm payroll growth of roughly 150,000. Manufacturing employment is also anticipated to slow from the 15,500 monthly averages seen from August to January.
Chad Moutray is the chief economist, National Association of Manufacturers.