U.S. private payrolls increased more than expected in February, pointing to continued labor market strength.
Private employment increased by 242,000 jobs last month, the ADP National Employment report showed on Wednesday. Data for January was revised higher to show 119,000 jobs added instead of 106,000 as previously reported. Economists polled by Reuters had forecast private employment increasing 200,000.
Federal Reserve Chair Jerome Powell told lawmakers on Tuesday that the U.S. central bank would likely need to raise interest rates more than expected and opened the door to a half-point rate hike this month to combat inflation, following a recent raft of strong economic data.
Job growth was robust in January, with the unemployment rate falling to more than a 53-1/2-year low of 3.4%. Consumer spending rebounded strongly and inflation picked up in January.
The ADP report, jointly developed with the Stanford Digital Economy Lab, was published ahead of the Labor Department's Bureau of Labor Statistics' more comprehensive and closely watched employment report for February on Friday.
It has not been a reliable gauge in forecasting private payrolls in the BLS employment report. The ADP initially reported 106,000 private jobs were created in January, a fraction of the 443,000 surge in private payrolls estimated by the BLS.
"More broadly, in the several months since the ADP data started being released with a new methodology, the first prints have not reliably predicted the first prints of the related BLS data," said Daniel Silver, an economist at JPMorgan in New York.
According to a Reuters survey of economists, private payrolls likely increased by 213,000 jobs in February. Total nonfarm payrolls are forecast rising by 203,000 jobs last month after surging 517,000 in January.