U.S. businesses added about 57,000 jobs in February, the fewest since July 2003, according to a report released Wednesday. The total amount of jobs added is about half of what economists were expecting.
The lower than expected growth indicates a weakness in the labor market and a slowing economy. The amount of new jobs was lower than the median forecast of 100,000 from a survey of economists polled by Reuters.
The 57,000 increase in jobs comes on the heels of a revised January gain of 121,000 jobs according to the ADP Employer Services report. The report is based on data from 364,000 businesses with about 22 million workers on payrolls.
“The deceleration of employment is consistent with the slowdown in GDP growth we’ve had in the last year,” said JOEL Joel Prakken, Chairman, Macroeconomic Advisers, LLC.
The ADP index, which is produted by Macroeconomics Advisers LLC for Automatic Data Processing Inc., is widely considered by economists to be the best indicator of the government’s monthly payroll report.
Some industries lost jobs in February. Industries producing physical goods lost 43,000 jobs in February with the manufacturing sector shedding 29,000 of them. The service industry on the other hand added 100,000 jobs, the weakest since April. Job gains have averaged 171,000 over the last three months.
“This is part of the welcome slowdown required to take some of the edge off the inflation numbers,” said Joel Prakken, chairman of Macroeconomic Advisers.
The report also shows that small and medium-sized businesses (meaningfewer than 500 employees) created 86,000 jobs in February. On the other hand large businesses lost 29,000, the most since mid-2003.
The figures indicate that companies are slowing down hiring following a slowdown in the economy stemming from the downturns in housing and manufacturing. The ADP National Employment Report is released each month two days before the government’s job survey is released. That report report is expected to forecast that employees last month added the fewest number of jobs in two years.
“The labor market continues to slacken,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. “Job losses in residential construction and industries related to it are continuing, and manufacturing is a perennial drag.”
Some companies are pairing costs by cutting jobs. Boeing Co., for example, the second largest U.S. defense contractor, said on March 2 that it will start cutting about 7,000 jobs due to the lack of U.S. government and international orders.