US private payrolls increase in February; January revised sharply higher

Private payrolls increase 475,000 in February; January data revised higher to show gain instead of loss

US private employers hired more workers than expected in February and data for the prior month was revised sharply higher to show strong job gains instead of losses, aligning with other reports that have painted an upbeat picture of the labor market.

Private payrolls increased by 475,000 jobs last month, the ADP National Employment Report showed on Wednesday. Employers added 509,000 jobs in January rather than laying off 301,000 workers as was initially reported. Economists polled by Reuters had forecast private payrolls would increase by 388,000 jobs.

While the report suggested the economy was on solid footing as the winter wave of COVID-19 infections driven by the Omicron variant was subsiding, some economists cautioned about the credibility of the report after the sharp upward revision to January's data.

"Huge revisions undermine ADP's credibility," said Michael Pearce, a senior economist at Capital Economics in New York.

"Quite frankly, with January's 301,000 reported drop revised into a 509,000 gain, the ADP figures are as much noise than signal."

The ADP report is jointly developed with Moody's Analytics and was published ahead of the Labor Department's more comprehensive and closely watched employment report for February on Friday. It has, however, a poor record predicting the private payrolls count in the department's Bureau of Labor Statistics employment report because of methodology differences.

While the initial ADP estimate showed private payrolls fell for the first time in a year in January, the BLS reported that the private sector hired 444,000 workers, with large upward revisions to employment gains in November and December.

Indications are that companies maintained a strong pace of hiring in February. Data from Homebase, a payroll scheduling and tracking company, showed substantial increases in the number of employees on the job as well as hours worked in mid-February.

According to UKG's workforce activity report, shift work in February recorded its largest monthly gain since the spring of 2020. The workforce management software company said the surge meant that the impact of the Omicron variant of COVID-19 on hourly shift work was over.

That aligns with expectations for another month of solid employment gains in February. Nonfarm payrolls likely increased by 400,000 jobs after rising 467,000 in January, according to a Reuters survey of economists. Private payrolls are forecast to have increased by 378,000 jobs in February.