New data revealed that private sector hiring slowed significantly in February and fell short of Wall Street’s expectations, adding to concerns that the US economy is losing steam.
On Wednesday, fresh data from ADP showed the private sector added 77,000 jobs in February, far fewer than economists’ estimates of 140,000 — and significantly lower than the 186,000 jobs added in January. January’s number of job additions was revised up from a prior reading of 183,000. February’s data marked the largest month-over-month decline in private payroll additions since March 2023.
“Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month,” ADP chief economist Nela Richardson said in a press release. “Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead.”
ADP’s weaker-than-expected job additions are the latest in a string of economic data that has prompted concern over the health of the US economy as President Trump’s tariff plans also cloud the outlook. In recent weeks, data has shown a decline in consumer spending, retail sales, manufacturing activity, and construction spending, while housing activity has remained in the doldrums. The confluence of data has sent forecasts for economic growth in the first quarter tumbling.
“We saw the same downshift in the labor market that is reflective of the overall economy,” Richardson told Yahoo Finance during a call with reporters. “We saw a decrease in spending in the consumer side in January, and so we’re seeing those industries tied to consumer, like retail sales, feel that same kind of inflection point downward.”
Richardson noted that any further deterioration in the consumer will be key to watch throughout 2025 for signs of an economic slowdown. For now, Richardson argues the data points to early signs of slowing versus flashing major warning signs.
“Even with the latest jobs report, I still am in the healthy labor market camp,” Richardson said. “That doesn’t mean that every part of the labor market is healthy, and some are flashing yellow lights a little stronger and longer than others.”
In an interview with Yahoo Finance on Wednesday morning, former Council of Economic Advisors chairman Jason Furman offered a similar stance on the state of the US economy.
“I don’t think the economy is turning on a dime in a negative direction,” Furman said. “But everything on the uncertainty, sentiment, all of that is pushing toward slowing.”
