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Private payrolls up 183,000, but Moody's economist says jobs may have peaked

Key Points
  • Private payrolls rose by 183,000 in February, around Dow estimates of a 185,000 gain, according to ADP and Moody's Analytics.
  • January's count was revised up sharply, from an initially reported 213,000 to 300,000.
  • Moody's economist Mark Zandi says payrolls may have reached their "high watermark."
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ADP February payrolls up 183K, January payroll revised up to 300K

Job creation at the company level cooled in February after a sizzling start to 2019, according to a report Wednesday from ADP and Moody's Analytics.

Private companies added 183,000 workers for the month, about in line with Dow Jones estimates of 185,000.

Though the number marked a deceleration, it came with some good news: ADP and Moody's sharply increased their count for January, raising the originally reported number of 213,000 all the way up to 300,000.

Still, one economist thinks the decline in February could indicate that the jobs market has peaked.

"The economy has throttled back, and so too has job growth," Mark Zandi, chief economist at Moody's Analytics, said in a statement. "Job gains are still strong, but they have likely seen their high watermark for this expansion."

In a subsequent interview on CNBC, Zandi said he sees first-quarter economic growth coming in around 0.3 percent, "so it's going to start showing up in the payrolls numbers."

The report comes amid robust job creation in an economy that was expected to be slowing but continues to crank out new employment opportunities. The number of unemployed — 6.3 million in December — continues to fall short of the amount of job openings, which stood at a record 7.3 million as 2018 came to a close, according to Labor Department figures.

Monthly nonfarm payroll gains have averaged 240,000 over the past three months, the fastest pace since mid-2016.

On the private payroll side, the ADP/Moody's report showed the biggest gains coming from professional and business services, with 49,000 new hires, while education and health services added 39,000. Construction contributed 25,000, Wall Street positions increased by 21,000 and manufacturing rose by 17,000.

Broadly speaking, service industries accounted for 139,000 of the total, and goods producers were responsible for 44,000.

Companies that employ 50 to 499 employees added the most, with 95,000, while large businesses hired 77,000 and small businesses increased by just 12,000.

"Midsized companies have been the strongest performer for the past year," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "There was a sharp decline in small business growth as these firms continue to struggle with offering competitive wages and benefits."

The report comes two days ahead of the Labor Department's nonfarm payrolls report, which is expected to show an increase of 180,000 and a tick down in the unemployment rate to 4 percent. Economists occasionally will use the ADP/Moody's count to adjust their estimates, though the closeness of the two numbers makes that seem unlikely.

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