The Service Sector Helps the February Job Market Stay Strong

man at hiring

In ADP's February 2018 National Employment Report, strong fundamentals continue to carry the economy while a few stand-out industries still lead the way.

The U.S. labor market added 235,000 jobs in February, according to the February ADP National Employment Report®. The numbers show that America's jobs market is continuing its uninterrupted growth.

Service providers hired an impressive 198,000 new employees in February, the vast majority of the month's overall hiring. Leisure and hospitality and the professional/business services are the stars of the show, but February's strong numbers are the result of solid performance across the entire economy, and the ability of almost every industry to meet or exceed its recent historical trend.

Leisure and Hospitality Leads the Way

The leisure and hospitality industry hired the most within the well-performing service sector, accounting for 50,000 new jobs on its own. This industry has seen fairly steady growth over the last few months. That sort of consistency is important, coming on the heels of the prolonged volatility that the industry experienced in the year before.

For Professional/Business Services, Consistency Is Everything

The professional/business services industry is one of the strongest employment sectors in the entire economy. In February, these businesses added 46,000 new jobs, showing that the trend is far from over and making them a key driver of service sector job growth.

However, unlike the leisure and hospitality industry, many of these jobs are high-paying positions with highly-experienced employees; well-compensated professional services positions make up 22,000 of the 46,000 new jobs in this area. That's encouraging after a January in which just 11,000 jobs were added in this sector. It represents a return to the strength seen in these businesses over the latter half of 2017.

Despite Surging Industries, the Whole Economy Is Responsible for Growth

Hiring was significant across all business sizes last month, with large businesses hiring 70,000 new workers, midsized 97,000 and small businesses 68,000. This is consistent with recent historical patterns, and a continuing rally for midsized businesses; in the past four months, these companies have hired an average of almost 96,000 workers. This is likely due in part to the success of the larger midsized businesses which have benefited from a strengthening of the global economy. This has also driven continued prosperity among the nation's largest employers who account for the majority of international business.

Combined with the lowest unemployment rate in a decade, per the Bureau of Labor Statistics, the February ADP National Employment Report® may look so strong that it indicates the market is headed toward "overheating," or toward a mild talent crisis that may lead to organizations facing a mounting skills gap. Citing the economy's steady and reliable behavior in the recent past, Mark Zandi, chief economist of Moody's Analytics, sums up the state of the job market as follows: "The job market is red hot and threatens to overheat. With government spending increases and tax cuts, growth is set to accelerate."