In February 2025, ADP reported US employment growth of 77,000, falling short of the expected 140,000. This marks the lowest reading since July, with the previous figure revised from 183,000 to 186,000.
Employment in the goods-producing sector increased by 42,000, while the service-providing sector saw a rise of 36,000, compared to 190,000 previously. Pay gains for job stayers remained at 4.7%, whereas pay growth for job changers decreased slightly to 6.7%.
Job Loss In Key Sectors
The report noted job loss particularly in the southern and western US, affecting sectors such as education, health, and trade. However, manufacturing showed strength, conflicting with results from the ISM manufacturing survey.
A jobs report undershooting expectations is never just a number—it’s a shift in direction that forces a reassessment of market positioning. With hiring momentum slowing sharply from prior months, traders will need to weigh whether this is an early sign of a broader slowdown or a temporary hiccup. The downward revision to the prior month’s data, though marginal, only reinforces the idea that employment conditions may not be as robust as they once appeared.
Breaking the details down further, the goods-producing sector holding firm with a 42,000 job increase looks encouraging, but the service-providing group paints a different picture. The contrast is undeniable. Services employment barely moved forward, a stark difference from the previous month’s 190,000 gain. Considering that services make up the bulk of the US economy, the weak figure cannot be ignored. There is also a notable change in pay trends. Workers staying in the same job are still seeing earnings grow at 4.7%, but those switching roles are no longer commanding the same level of pay increases. Their wage growth slipping to 6.7% suggests less bargaining power than before, hinting at cooling demand for labour.
Regional Employment Trends
Regional differences further illustrate the uneven nature of job trends. The South and West, two areas that have been economic powerhouses in recent years, are now shedding jobs, particularly in education, healthcare, and trade. These are not marginal industries. When hiring slows in sectors that traditionally offer stability, the broader implications will be scrutinised. Tying this in with other data, manufacturing stands out as a rare bright spot, which is surprising in light of ISM’s manufacturing report indicating weakness. This creates a contradiction. Either companies in the sector are expanding their workforce despite softer growth, or there is a disconnect between survey-based data and actual hiring numbers.
The weeks ahead will demand close attention to corroborating economic indicators. If upcoming data echoes the softness in hiring, adjustments across rate expectations and risk positioning will follow. However, should other reports contradict it, markets may reconsider whether this month’s employment weakness is truly the start of a trend or just an anomaly.
