Companies in U.S. Added Fewer Jobs Than Forecast in February

Photographer: Sam Hodgson/Bloomberg

Job seekers line up for the Recruit Military veteran job fair in San Diego on Feb. 27, 2014. Close

Job seekers line up for the Recruit Military veteran job fair in San Diego on Feb. 27, 2014.

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Photographer: Sam Hodgson/Bloomberg

Job seekers line up for the Recruit Military veteran job fair in San Diego on Feb. 27, 2014.

Companies added fewer workers than projected in February, a sign that U.S. employers were waiting for a pickup in demand before boosting headcount, a private report based on payrolls showed today.

The 139,000 increase in employment followed a revised 127,000 gain in January that was weaker than initially reported, the weakest two months since August-September 2012, according to the ADP Research Institute in Roseland, New Jersey. The median forecast of 39 economists surveyed by Bloomberg called for a 155,000 advance.

Harsh winter weather conditions, which kept some shoppers away from stores and car dealerships, help explain why companies were hesitant to accelerate hiring at a more robust pace. Faster payroll growth that spurs bigger wage gains would help to boost the consumer purchases that make up almost 70 percent of the economy.

“Employment was weak across a number of industries,” Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said in a statement. Moody’s produces the figures with ADP. “Bad winter weather, especially in mid-month, weighed on payrolls. Job growth is expected to improve with warmer temperatures.”

Estimates in the Bloomberg survey of economists ranged from gains of 100,000 to 180,000 after a previously reported increase of 175,000 in January. With today’s report, ADP issued its annual benchmark revisions to incorporate revised payrolls data from the Bureau of Labor Statistics.

Missing Mark

ADP’s numbers have missed the mark in tracking the government’s jobs figures over the past couple of months. The group’s initial estimates showed a 238,000 gain in employment for December followed by a 175,000 January increase. That compares with the Labor Department’s initial estimate of an 87,000 gain in December private payrolls and a 142,000 increase in January.

“The ADP report hasn’t done a particularly good job in signaling first prints in the BLS report, overpredicting that number by 33,000 in January, and a whopping 151,000 in December,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, said in an e-mail. “Not surprisingly, the magnitude of those misses was revised lower after the revisions in today’s report, and generally the ADP revisions have an uncanny ability to make first-print misses disappear.”

Stocks were little changed after the report. The Standard & Poor’s 500 Index fell less than 0.1 percent to 1,872.18 at 10:05 a.m. in New York.

Goods Producers

Payrolls at goods-producing industries increased headcount by 19,000. Factories added 1,000 workers, while construction companies took on 14,000. Service providers climbed by 120,000 jobs in February, led by professional and business service providers.

Companies employing 500 or more workers added 44,000 jobs. Medium-sized businesses, with 50 to 499 employees, took on 35,000 workers and small companies expanded payrolls by 59,000.

A Labor Department report scheduled for release on March 7 may show that private payrolls rose by 154,000 last month, according to the Bloomberg survey median. Total payrolls, which include government jobs, probably rose 150,000 after a 113,000 gain in January, based on the Bloomberg survey median.

“The very cold weather is playing havoc on all the economic data,” Zandi said in an interview on CNBC. The group’s estimates aren’t affected by the weather, so the Labor Department’s figures could come in even weaker than the ADP figures, he said.

ADP Data

ADP’s data are based on the number of people on their customers’ payrolls, while the Labor Department’s figures are based on the number of workers receiving pay for the period covered by the agency’s survey week that includes the 12th of the month.

The week ended Feb. 15 was the coldest second week of February since 2011, according to weather-data provider Planalytics Inc. The South Atlantic region of the U.S. experienced the most snowfall since 1983 and New England registered the most snow in 20 years, the Berwyn, Pennsylvania-based firm said. The colder temperatures and winter storms followed the chilliest January in three years.

In areas where weather has been less of a factor, demand has held up, according to Kevin Mansell, chief executive officer at clothing and home goods retailer Kohl’s Corp.

“Frankly our West Coast business, which has had good weather particularly for spring selling, has performed really well,” Mansell said in a Feb. 27 conference call. “That gives us a lot of optimism,” he said, “once there’s more reasonable weather in particularly the Midwest and Northeast.”

Housing Industry

Winter’s effect on the homebuilding industry may temper construction hiring. Housing starts fell 16 percent in January to an 880,000 annualized rate, according to data from the Commerce Department issued Feb. 19.

Verizon Communications Inc.’s wireless division is among those adding to employee rosters. The company is bringing on 98 customer specialist and retail jobs in South Carolina before April 1, it announced in a release this week.

To contact the reporter on this story: Jeanna Smialek in Washington at jsmialek1@bloomberg.net

To contact the editor responsible for this story: Carlos Torres at ctorres2@bloomberg.net

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