US employers stepped up their pace of hiring last month, payroll firm Automatic Data Processing Inc (ADP) said on Wednesday, as the US central bank warned that inflationary pressures remained widespread early this year.
The figures are the latest sign that more effort might be needed to cool the world’s biggest economy, following a series of recent indicators showing that hiring remained strong, consumer spending resilient and inflation persistent.
These came despite the US Federal Reserve’s efforts to tame price increases, raising interest rates eight times since early last year to ease demand.
Private sector employment surged more than expected by 242,000 jobs last month, about double the revised figure of 119,000 in January, while wage growth continued, ADP said in a report.
“We’re seeing robust hiring, which is good for the economy and workers, but pay growth is still quite elevated,” ADP chief economist Nela Richardson said in a statement.
Wage growth last month slowed to 7.2 percent compared with a year earlier, the survey showed, while the figure for workers who changed jobs also eased to 14.3 percent.
“The modest slowdown in pay increases, on its own, is unlikely to drive down inflation rapidly in the near-term,” Richardson said.
“Inflationary pressures remained widespread,” even though price increases moderated in many parts of the country, the Fed said in its “beige book” survey of economic conditions.
The report, also released on Wednesday, said that “labor market conditions remained solid.”
Despite hiring freezes by some firms and reports of layoffs, employment continued to increase at a modest to moderate pace in most areas, it said.
Fed Chair Jerome Powell on Tuesday said that policymakers are prepared to step up the pace of rate hikes — and lift rates higher than previously anticipated — if needed to cool inflation and the robust jobs market.
He addressed US lawmakers again on Wednesday, saying that Fed policymakers would look at all the available data before making a decision.
Analysts caution against extrapolating too much, given that the ADP data can diverge from official numbers.
For now, the figures appear stronger than expectations for the private sector portion of payrolls in a government data release scheduled for today, High Frequency Economics Ltd chief US economist Rubeela Farooqi said.
“We expect payrolls to remain positive for now, but the pace should slow as the Fed pushes rates further into restrictive territory,” she said.
Policymakers have been keeping an eye on wage gains as companies competed to find and retain workers, concerned that this could lead to rising costs for services and make price increases more persistent.
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