CNN
—
The Trump administration’s frenetic policy changes appear to be making US businesses think twice about hiring new workers.
New data released Wednesday showed that hiring by US private-sector companies fell sharply last month, much more than economists had expected.
Private-sector employment increased by an estimated 77,000 jobs in February, according to payroll giant ADP. That’s a dramatic drop-off from the strong job growth of 186,000 seen in January and barely half the 142,500 net gain that economists had expected, according to FactSet estimates.
“Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month,” Nela Richardson, chief economist at ADP said in a statement. “Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead.”
Strong consumer spending, shored up by a solid labor market, has helped to power economic growth. However, in recent weeks, the all-mighty consumer was starting to show some apprehension.
Consumer sentiment plummeted, inflation expectations went on the rise, and overall spending dropped for the first time in nearly two years.
Consumers’ confidence in the economy is reversing course at a time when the Trump administration has taken shock-and-awe policy approaches, including slapping massive tariffs on America’s three biggest trading partners, taking a figurative chainsaw to the federal workforce and promising mass deportations of undocumented immigrants.
The volatility, especially on matters such as trade, has fed in to increased business uncertainty: New data from the Federal Reserve Bank of New York released Wednesday showed that surveyed businesses expect costs and inflation to move higher in 2025.
ADP’s National Employment Report showed the largest job losses in the service sector, particularly trade, transportation, and utilities (-33,000); education and health services (-28,000) and information (-14,000).
The smallest of businesses (those with 19 or fewer employees) and those in the West and the South regions saw the biggest job losses, according to the report.
Pay gains held steady at 4.7% for workers who stayed with their employer and eased slightly to 6.7% from 6.8% for people who changed jobs.
ADP’s tabulations don’t always correlate with the official federal jobs report, but it’s sometimes looked to as a proxy for overall hiring activity.
The February jobs report is due out Friday, and economists are expecting a net gain of about 160,000 jobs.
