ADP says U.S. businesses added 63,000 jobs in February as hiring picked up but the labor market remained sluggish

By Jeffry Bartash

Most new jobs are concentrated in health care

Fewer "now hiring" signs appear on U.S. storefronts these days.

This is a developing story. Check back for updates.

ADP said U.S. businesses generated 63,000 new jobs in February - the biggest gain in seven months - in another sign that a frozen U.S. labor market might be partially thawing.

Wall Street forecasters had predicted a 48,000 increase in private-sector jobs last month.

"We've seen an increase in hiring and pay gains remain solid, especially for job-stayers," said Nela Richardson, chief economist at ADP, the U.S.'s largest processor of company payrolls.

Still, the economy is adding far fewer jobs now than in the past owing to slower growth in the working-age population and uncertainty triggered by U.S. tariffs.

Most of the new jobs have been concentrated at just a few kinds of businesses, mainly healthcare providers. That was the case again in February.

The ADP report is normally a second-tier labor-market gauge, but it's taken on fresh importance after repeated delays in the official U.S. employment report due to government funding lapses.

Wall Street economists are forecasting a February increase of 50,000 in the official nonfarm-payrolls survey, which is produced by the U.S. Bureau of Labor Statistics. The BLS report is due on Friday.

Both the BLS and ADP estimates are net figures - that is, jobs created minus jobs destroyed.

'Key details: Healthcare and education services generated 58,000 new jobs in February, ADP said. Construction companies added 19,000 jobs.

Employment fell by 30,000 in professional and business jobs - basically white-collar work. Manufacturers also shed 5,000 jobs.

The increase in private-sector employment in January was updated to show a smaller 11,000 increase instead of the 22,000 originally reported.

Big picture: The economy doesn't need to create many jobs to keep the unemployment rate low, since the population is growing more slowly than it had been. Monthly increases of 50,000 or so might do the trick.

Yet the low jobless rate masks weakness in the labor market. Jobseekers aren't find as much work, and job searches are taking longer.

A weaker labor market isn't hurting the broader economy all that much, though, because most people who want a job already have one. That's kept consumer spending - the main engine of the economy - on a healthy track.

Looking ahead: "Ideally, job gains should be happening across the whole of the labor market," said Elizabeth Renter, senior economist at NerdWallet. "An expanding older population will continue to drive growth in healthcare, but there aren't similar demographic drivers of jobs in other sectors."

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to rise in Wednesday trading. Stocks have fallen amid volatile trading since the U.S. and Israel attacked Iran over the weekend.

-Jeffry Bartash

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03-04-26 0925ET