Payroll processor ADP reported that the private sector added 139,000 jobs on a seasonally-adjusted basis in February, well below the economists’ expectations of 150,000-160,000 jobs added. CNBC, predictably, blamed the continued cold weather in February:
The U.S. economy saw modest private sector job creation in February, a closely watched labor market barometer showed on Wednesday, as pervasive cold weather appeared to restrain hiring.
Employers added 139,000 private sector jobs, payroll processor ADP said in its monthly National Employment Report, a figure below Wall Street’s expectations of 160,000, and only slightly stronger than January’s pace of 127,000, which was revised down from 175,000.
The January downward revision is a rather massive one. Tom Blumer noted the extent of what appears to be ADP’s annual revision of its data:
Whoa — this was a big month for prior-month knockdowns:
– January went from 175K to 127K.
– December went from 227K to 191K.
– November went from 289K to 245K.
– October went from 206K to 196K.
That’s a combined reduction of 138,000 jobs from the four previous months.
Going back further, the four previous months (June through September 2013) were revised up by a combined 12K. February through May revisions totaled +48K.
The downward revisions for the 4 months prior to February all but wiped out the one-month increase from January to February. Taking the entirety of the prior 12 months into account, the number of private-sector jobs by ADP’s measure increased by 2,165,000 from February 2013 to 115,843,000. That is still 128,000 fewer than the pre-recession peak of 115,972,000 private-sector jobs in January 2008.
Meanwhile, after reporting that their manufacturing index for February rose to a better-than-expected 53.2 from January’s 51.3 earlier in the week, the Institute for Supply Management reported that their service index for February fell from 54 to a worse-than-expected 51.6. Reuters noticed a worse trend in today’s release – employment in the services sector:
Growth in the U.S. services sector slowed in February, coming in below forecasts as the employment index fell into contractionary territory for the first time in more than two years, an industry report showed on Wednesday.
The Institute for Supply Management said its services sector index fell to 51.6 last month, the worst read for the index since February 2010 as bad weather impacted business activity….
The employment index dropped in February to 47.5 from 56.4, falling below 50 for the first time since December 2011. It was the lowest read for the subindex since March 2010.
Reuters, immediately before reporting on the ISM services employment index, noted that 50.0 is considered the division point between expansion and contraction in the ISM index. Given the manufacturing index rose by more than expected, the weather claims for all that ills the economy, repeated by Reuters as the reason for the drop in the ISM services sector index, ring hollow.
Case in point – Radio Shack is planning to close up to 1,100 stores, a fifth of its total and a fourth of the company-owned stores, after weak holiday sales left it with a $400 million loss last year. The Wall Street Journal notes that this is significantly more than the 200 stores Radio Shack originally wanted to close and the 500 stores it was thinking about closing last month.