Industryweek 13170 Mfg Workers

US Private Jobs See Biggest Surge in 6 Years

March 8, 2017
The second straight month of very strong jobs data will play into President Trump's focus on manufacturing jobs, which he has promised to bring back to America.

U.S. private-sector hiring posted the biggest increase in nearly six years last month, while the goods-producing sector saw record job growth, payroll services firm ADP reported on March 8.

The second straight month of very strong jobs data will play into President Trump's focus on manufacturing jobs, which he has promised to bring back to America.

But if the strong gains continue, it could mean lending rates will rise faster than currently expected, as the U.S. central bank closely monitors the so-far tame inflation threat.

Total private payrolls increased an eye-popping 298,000 in the month, beating the consensus forecast for a 180,000 rise, and outpacing the strong 261,000 increase in January, which was revised up from the initial figure.

It was the biggest increase in private employment since April 2011.

But the highlight of the data was the goods-producing industries which posted the biggest increase in the history of the report, going back to April 2002. The sector added 106,000 workers last month, while services firms increased 193,000.

"February proved to be an incredibly strong month for employment with increases we have not seen in years," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

The data, which is extracted from ADP payroll data, is frequently seen as a predictor of the Labor Department's monthly employment report, which is due out March 10.

The consensus forecast is for an increase of 188,000 in total payrolls and 185,000 for private jobs, but economists may revise their estimates upward following the ADP report.

Trump has consistently repeated his campaign pledge to bring manufacturing jobs back to U.S. shores, and has turned to Twitter frequently to pressure specific companies -- a tactic that has had some success.

ADP reported a gain of 32,000 manufacturing jobs, taking the sector to its highest level since January 2009.

In a tweet early March 8, prior to release of the ADP data, Trump touted a little-know LinkedIn hiring report released on March 7, showing jobs increases in January and February that were the "strongest consecutive months of hiring since August and September 2015."

Fed Could Hike Faster

The ADP report also is likely to increase confidence in markets that the Federal Reserve will raise interest rates next week, given the solid indications the economic recovery is picking up steam.

But the Fed's policy-setting Federal Open Market Committee, which meets March 14-15, may start thinking about more increases that the two to three expected for the year, if tightening labor markets fuel fears of accelerating wages that could lead to more inflation.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the strong hiring "will push the unemployment rate down further, forcing the Fed to tighten more quickly than markets -- and policymakers -- currently expect.

He cautioned that the ADP report "is not a consistent reliable guide to the initial official private payroll number, but it probably would be unwise to ignore it altogether."

Mickey Levy of Berenberg Capital Markets, agreed the Fed will be under more pressure to prevent the economy from overheating. 

"The Fed will certainly acknowledge the strong job gains along with other data and soaring confidence," he said in a research note.  "If job gains of this magnitude continue and wages tilt up and inflation pressures build, the Fed will be forced to hike more than expected in 2017-2018."

Mark Zandi, chief economist of Moody's Analytics said in the ADP statement, the unseasonably mild winter weather "undoubtedly played a role" in the strong ADP numbers.

"But near record high job openings and record low layoffs underpin the entire job market," he said, noting strength in construction, mining and manufacturing.

Broken down by size, medium-sized business increased 122,000 and small businesses added 104,000. Large firms lagged with 72,000.

By Agence France-Presse, 2017

Popular Sponsored Recommendations

Global Supply Chain Readiness Report: The Pandemic and Beyond

Sept. 23, 2022
Jabil and IndustryWeek look into how manufacturers are responding to supply chain woes.

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

How Manufacturers Can Optimize Operations with Weather Intelligence

Nov. 2, 2023
The bad news? Severe weather has emerged as one of the biggest threats to continuity and safety in manufacturing. The good news? The intelligence solutions that build weather ...

How Organizations Connect and Engage with Frontline Workers

June 14, 2023
Nearly 80% of the 2.7 billion workers across manufacturing, construction, healthcare, transportation, agriculture, hospitality, and education are frontline. Learn best practices...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!