By Xavier Fontdegloria

Hiring among U.S. private-sector employers gained momentum in February, suggesting the labor market remained tight, according to data from the ADP National Employment Report released Wednesday.

Employment in the nonfarm private sector increased by 242,000 in February, accelerating from a 119,000 gain in January, ADP said, beating the 205,000 rise expected by economists in a poll from The Wall Street Journal.

January's reading was upwardly revised from an initial estimate of 106,000.

"We're seeing robust hiring, which is good for the economy and workers, but pay growth is still quite elevated," said Nela Richardson, chief economist at ADP.

The ADP estimate is based on aggregated payroll data of more than 25 million U.S. workers and is independent from the Labor Department official data. The ADP series can diverge considerably from the Labor Department's data.

Employment gains were driven by medium-sized and large businesses, which added 148,000 and 160,000 jobs, respectively. However, small businesses shed jobs again, 61,000 in February, adding to a downward trend that has been running since August.

By sector, services providers created 190,000 jobs, with the leisure and hospitality sector adding 83,000 payrolls and financial activities 62,000 additional jobs.

Goods producers added 52,000 jobs, with 43,000 new payrolls in manufacturing and 25,000 additional jobs in mining. However, the construction sector lost 16,000 jobs.

Annual wage growth slowed slightly in February to 7.2% from 7.3% in January, according to the survey. Pay data is based on the salaries of almost 10 million individual employees over a 12-month period.

"The modest slowdown in pay increases, on its own, is unlikely to drive down inflation rapidly in the near-term," Ms. Richardson said.

The U.S. Labor Department is expected to release its employment report Friday. Economists polled by The Wall Street Journal expect nonfarm payrolls to increase by 225,000 in February, and the unemployment rate is forecast to be unchanged at 3.4%.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

March 08, 2023 08:50 ET (13:50 GMT)

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