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U.S. private payrolls rise less than expected in February

Kitco News

WASHINGTON (Reuters) - U.S. private employers hired fewer workers than expected in February, suggesting the labor market was struggling to regain speed despite the an nation’s improving public health picture.

Private payrolls increased by 117,000 jobs last month, the ADP National Employment Report showed on Wednesday. Data for January was revised up to show 195,000 jobs added instead of the initially reported 174,000.

Economists polled by Reuters had forecast private payrolls would increase by 177,000 jobs in February.

The ADP report is jointly developed with Moody’s Analytics. It has a very poor track record predicting the private payrolls count in the government’s more comprehensive, and closely watched, employment report because of methodology differences. The ADP report’s initial 174,000 private payrolls tally for January way overshot the Labor Department’s total of only 6,000.

“It remains difficult to use the ADP data as a signal for forecasting the Labor Department employment figures,” said Daniel Silver, an economist at JPMorgan in New York.

Nevertheless, the report is still followed for clues on the labor market’s health.

The labor market has been slow to regain traction as some restrictions on services businesses have been rolled back amid a decline in new COVID-19 infections and hospitalizations.

The number of Americans filing initial claims for weekly state unemployment benefits remains way above its 665,000 peak during the 2007-09 Great Recession. At least 19 million people are collecting unemployment checks.

The lack of significant improvement in the labor market is also despite nearly $900 billion an additional pandemic relief provided by the government in late December, which boosted consumer spending and positioned the economic for faster growth in the first quarter. That has led to concerns of labor market scarring that could take years to heal.

According to a Reuters poll of economists, the government will likely report on Friday that nonfarm payrolls increased by 180,000 jobs in February after rising only 49,000 in January.

Hopes for a pick-up in hiring were supported by a survey last week showing consumers’ perceptions of the labor market improved in February after deteriorating in January and December. In addition, a measure of manufacturing employment increased to a two-year high in February.

The economy has recovered 12.3 million of the 22.2 million jobs lost during the pandemic. Employment is not expected not return to its pre-pandemic level before 2024.

Reporting By Lucia Mutikani; Editing by Chizu Nomiyama

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