US private sector adds more jobs than expected

Employment increased by 242,000 from January, versus expectations for a 200,000 jump. The figures also showed that annual pay was up 7.2%.

Small businesses with fewer than 50 employees shed 61,000 jobs, while medium businesses with between 50 and 499 employees added 148,000 jobs. Large businesses with more than 500 employees added 160,000 jobs.

The service sector created 190,000 jobs, while the goods-producing sector saw a 52,000 increase.

Nela Richardson, chief economist at ADP, said: "There is a trade-off in the labour market right now.

"We're seeing robust hiring, which is good for the economy and workers, but pay growth is still quite elevated. The modest slowdown in pay increases, on its own, is unlikely to drive down inflation rapidly in the near term."

Kieran Clancy, senior US economist at Pantheon Macroeconomics, said the ADP report is an unreliable guide to payrolls and should be ignored.

"ADP has published only six previous payroll numbers using its new methodology, so we don’t yet know whether it will prove to be a reliable indicator," he said.

"Four of these readings undershot the official private jobs number- including the massive 337K undershoot in January- though this is nothing like enough to prove definitively that the ADP’s number is systematically biased to the downside. Our model is based on the hard employment data from Homebase, and ignores the ADP number; that model nailed January, and points to a 200K increase in February payrolls."