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Private employers added just 77,000 jobs in February, the ADP said in its National Employment Report released on Wednesday, Mar. 5. That number marks the smallest job growth since July 2024 and was down sharply from January's revised total of 186,000.
February's data is the latest in a wave of troubling economic indicators during the first two months of President Donald Trump's return to office.
"Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month," said ADP chief economist Nela Richardson. "Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead."
The 77,000 jobs fell well below the Dow Jones consensus estimate of 148,000, CNBC reported. The hiring decline appears to be signaling an economic slowdown as businesses navigate resurging inflation and new trade wars that Trump has started against longtime commerce partners.
While overall job creation slumped, the Northeast stood out with the largest employment gains, adding 55,000 jobs. New England led the way with 34,000 new positions, while the mid-Atlantic contributed 21,000 jobs.
By contrast, the South and West both lost jobs, shedding 12,000 and 27,000 positions, respectively. The Midwest slightly outperformed the Northeast with 56,000 new positions.
The biggest losses came in the trade, transportation, and utilities industries, which cut 33,000 jobs, along with education and health services, which declined by 28,000. Information sector employment also fell by 14,000 jobs.
The leisure and hospitality industry saw the most robust growth, adding 41,000 positions. Professional and business services gained 27,000 new jobs.
Small businesses struggled the most, losing 12,000 jobs in February, with the steepest declines among companies with fewer than 20 employees. Medium-sized firms – those with 50 to 499 workers – added 46,000 jobs, while large businesses employing 500 or more gained 37,000 positions.
Pay for job-stayers increased by 4.7 percent year-over-year in February, matching the previous month's pace. Job-changers saw slightly smaller gains, with annual pay growth slipping from 6.8 percent in January to 6.7 percent.
The latest employment data comes amid growing fears of an economic slowdown, compounded by Trump imposing 25 percent tariffs on imports from Mexico and Canada while raising duties on Chinese goods to 20 percent. Businesses across multiple industries have warned that the trade wars could further disrupt supply chains and drive up costs for American consumers.
Canadian President Justin Trudeau announced $155 billion in tariffs on US goods, with $30 billion taking effect immediately. Mexican President Claudia Sheinbaum said she'll unveil countermeasures on Sunday, Mar. 9, while China has already raised tariffs up to 15 percent on US agricultural imports like chicken, pork, soy, and beef.
The Dow Jones Industrial Average opened at 42,518.06 on March 5. That's down 1,382.43 points from when the stock market opened on Monday, Mar. 3.
There are signs Trump may already reverse course on his tariff decision. Commerce Secretary Howard Lutnick told Bloomberg that the President may decide to add some relief for the duties on the country's neighbors.
Retailers are also bracing for higher prices on consumer goods. Best Buy and Target's CEOs hinted that prices for shoppers will likely rise because of Trump's tariffs.
Unemployment claims have also risen to their highest level since October 2024. New claims jumped by 22,000 to 242,000 for the week ending Saturday, Feb. 22.
The lagging employment numbers and trade wars come days after The Conference Board said consumer confidence took its steepest monthly dive since August 2021.
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