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WASHINGTON, March 4 (Reuters) - U.S. private payrolls increased more than expected in February, pointing to labor market strength before a recent escalation of recession fears ignited by the coronavirus epidemic that prompted an emergency interest rate cut from the Federal Reserve.
The ADP National Employment Report on Wednesday showed private payrolls rose by 183,000 jobs last month after advancing by a downwardly revised 209,000 in January. Economists polled by Reuters had forecast private payrolls increasing by 170,000 jobs in February after a previously reported 291,000 jump in January.
The ADP report, jointly developed with Moody’s Analytics, was published ahead of the government’s more comprehensive employment report for February scheduled for release on Friday. While it has a poor record predicting the private payrolls component of the government’s employment report because of methodology differences, the better than expected increase in hiring last month suggested that labor market fundamentals remain solid.
According to a Reuters survey of economists, the government report on Friday is likely to show nonfarm payrolls increased by 175,000 jobs last month after surging 225,000 in January. The unemployment rate is forecast steady at 3.6% in February.
The Fed on Tuesday slashed its benchmark overnight interest rate by a half percentage point to a target range of 1.00% to 1.25%, in the U.S. central bank’s first emergency rate cut since 2008 at the height of the financial crisis. Fed Chair Jerome Powell said “the coronavirus poses evolving risks to economic activity.”
The fast-spreading coronavirus has killed more than 3,000 people and sickened at least 90,000, mostly in China. In the United States, nine people have died from the illness associated with the virus and the number of infections exceeded 100.
Investors fear the coronavirus epidemic could derail the longest U.S. economic expansion in history, now in its 11th year, through disruptions to supply chains and exports. It is also expected to hurt the transportation, tourism and leisure and hospitality industries.
Economists expect the coronavirus to restrain economic growth in the first half of the year to just above 1.0%. The economy grew 2.3% in 2019. (Reporting By Lucia Mutikani Editing by Chizu Nomiyama)