Survey: February job growth weak

WASHINGTON - A private survey shows that U.S. companies added slightly more jobs in February than in the previous month, but harsh winter weather still weighed on hiring.

Payroll processor ADP said Wednesday that businesses added 139,000 jobs last month, up from only 127,000 in January. But January’s figure was revised sharply lower from an original estimate of 175,000.

The data suggest that the government’s jobs report for February, to be released Friday, will show only modest gains. Economists forecast it will show that employers added 145,000 jobs last month. That is below the average gains of nearly 205,000 jobs a month in the first 11 months of last year.

The ADP numbers cover only private businesses and often diverge from the government’s more comprehensive report. In January and December its initial figures were much higher than the official count. The Labor Department said employers added 113,000 jobs in January and just 75,000 in December.

There were some positive signs in ADP’s figures. Construction firms added 14,000 jobs, the third-straight month of steady gains.

But manufacturing added only 1,000 jobs, and hiring by hotels, restaurants and entertainment companies slowed, the report found.

Mark Zandi, chief economist at Moody’s Analytics,which helped compile the report, said that hiring should rebound once the weather improves. Low temperatures and snowstorms caused many businesses to close last month and possibly delay hiring.

“Employment was weak across a number of industries,” Zandi said. “Bad winter weather, especially in midmonth, weighed on payrolls. Job growth is expected to improve with warmer temperatures.”

Some companies also built up large stockpiles of goods in the second half of last year, which means they are likely ordering fewer products this quarter, slowing output.

“They’re all temporary weights on growth, and we should see a pickup … as we move into the spring and summer months,” Zandi said.

The unseasonably cold weather may have shaved 0.2 percentage point from the economy’s growth rate in the January-March quarter, according to economists at IHS Global Insight.

Growth is likely to come in at a 2 percent annual rate in the first three months of the year, Zandi said, down from 2.4 percent in the October-December quarter.

U.S. service companies expanded more slowly in February as hiring levels declined in a cautionary sign for the economy coming out of winter.

The Institute for Supply Management said Wednesday that its service-sector index fell to 51.6 from 54 in January. Any reading above 50 indicates expansion.

“The weather really affected a lot of the economic data throughout January and February,” said Thomas Simons, an economist at Jefferies LLC in New York. “It’s probably appropriate to have pretty muted expectations for payrolls this month,” especially considering that the survey week included the harshest conditions for the month, he said.

The real estate, retail, hotel, food services and construction industries all contracted last month. And a measure for hiring plunged 8.9 points to 47.5, evidence that many companies shed workers. It raises concern that the February jobs report the government will release Friday could disappoint.

“Risk of a Friday shock has risen,” concluded Ian Shepherdson, chief economist for Pantheon Macroeconomics.

The trade group’s survey covers businesses that employ 90 percent of the workforce, including retail, construction, health-care and financial-services firms.

Anthony Nieves, head of Institute for Supply Management’s services survey, said comments from businesses indicate that snow and falling temperatures held back employment.

Several companies were “pulling the reins back,” Nieves said. “Weather has come into play a bit.”

Despite the downturn in employment, measures for new orders and production in the index both point to continued expansion.

“Economy still plugging along, but at a very slow rate of growth,” said one firm interviewed for the survey.

The government said the economy grew at a 2.4 percent annual rate in the October-December quarter, down sharply from an initial estimate of a 3.2 percent rate. Information for this article was contributed by Christophers S. Rugaber and Josh Boak of The Associated Press and by Jeanna Smialek and Michelle Jamrisko of Bloomberg News.