Private Sector Job Creation Falls to 8-Month Low, Raising Concerns for Friday's Nonfarm Report

Private sector job creation slowed significantly in February, according to ADP, fueling concerns about Friday's official nonfarm payroll report and a potential economic slowdown amidst President Trump's new round of tariffs.

Companies added just 77,000 new workers during the month, a sharp decline from the upwardly revised 186,000 in January and well below the 148,000 consensus estimate, according to ADP.

The total represents the smallest increase since July and comes at a time when worries are mounting about slowing economic growth, compounded by the new tariffs on China, Mexico, and Canada that took effect on Tuesday.

"Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month. Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead," said ADP Chief Economist Nela Richardson.

ADP reported that jobs in trade, transportation, and utilities fell by 33,000 positions. Education and health services saw a decline of 28,000, while information services decreased by 14,000.

On the other hand, leisure and hospitality jobs increased by 41,000, while professional and business services added 27,000. Financial activities and construction both saw gains of 25,000, and manufacturing reported an increase of 18,000.

The ADP count serves as a reference to the official nonfarm payrolls due Friday, the two figures can differ substantially due to different methodologies. For example, in January, the BLS reported an increase of just 111,000 in private payrolls, while ADP counted 183,000.

Economists expect Friday's report to show job gains of 170,000 and an unemployment rate steady at 4%.