"Little Non-Farm" Surprises! U.S. February ADP Employment Numbers Drop to Lowest Since Last July

According to the Zhitong Finance APP, data released on Wednesday showed that the U.S. February ADP employment number, known as the "little non-farm," only increased by 77,000, the smallest increase since July 2024, far below the market expectation of 140,000 and the previous value of 183,000.

ADP Chief Economist Nela Richardson stated that policy uncertainty and a slowdown in consumer spending may have led to layoffs or a slowdown in hiring last month. "Our data, combined with other recent indicators, suggests that employers are hesitant to hire as they assess the future economic environment."

As concerns about the U.S. economic outlook have intensified in the recent market, this latest data seems to indicate signs of a slowdown in the U.S. job market. As of the time of writing, the U.S. dollar index (DXY) fell by 0.72%, dropping below the 105 mark. The three major U.S. stock index futures also retraced earlier gains made during the day.

The U.S. February non-farm employment data, to be released on Friday, is expected to provide the market with further insights into the state of the U.S. labor market and economy. According to market forecasts, the U.S. February non-farm employment number is expected to increase by 133,000 jobs, down from 143,000 in January; the unemployment rate is expected to be 4%. Non-farm employment data has always been an important indicator of the health of the U.S. economy. If the non-farm job additions decrease for two consecutive months, it indicates a reduced willingness of companies to expand, weakening economic growth momentum, which would significantly increase the pressure on the Federal Reserve to cut interest rates.

Concerns Over U.S. Economic Outlook

With weak U.S. economic data and escalating trade tensions damaging consumer confidence and business activity, concerns over U.S. economic growth have once again become a focal point for financial markets. On March 3rd (Monday), the Atlanta Federal Reserve's GDPNow model projected a GDP contraction of 2.825% for the first quarter of 2025, marking the worst U.S. GDP forecast since the COVID-19 pandemic began in 2020.

Notably, last Friday, the GDPNow model revised its U.S. first-quarter GDP forecast to a contraction of 1.5%. A month ago, the model's prediction was a growth of 2.33%. In other words, within just one month, the model has made consecutive predictions of a significant contraction in the U.S. economy for the first quarter.

Francois Savary, Chief Investment Officer of Genvil Wealth Management, commented on the weakening confidence of U.S. consumers and businesses, stating, "One thing is crucial for the economy: confidence, and that confidence has been shaken." "I do not believe a recession is a foregone conclusion, but this is also one of the reasons we decided to reduce our investment in U.S. stocks." Candice Lee, CEO of the Canadian Chamber of Commerce, warned that U.S. tariff policies are forcing Canada and the U.S. toward "economic recession, unemployment, and economic disaster."

Concerns about the U.S. economy falling into stagflation have recently intensified. Several top analysts have indicated that the U.S. may face a situation of high inflation and low economic growth simultaneously. Torsten Slok, Chief Economist at Apollo Global Management, stated that he believes the elements of stagflation may have already emerged He pointed out that global trade is becoming more fragmented, global immigration is increasing, and industrial policies in other countries are limiting competition, all of which could lead to rising prices.

Daval Josh, Chief Strategist at BCA Research, believes that the U.S. could fall into "mini-stagflation" as early as the second quarter of this year. Josh stated that inflation appears to be "stuck" above the Federal Reserve's 2% target. Higher prices will make the Federal Reserve reluctant to cut interest rates further this year, which could exacerbate the slowdown in economic growth. He added, "I think this could happen soon." Barry Bannister, Managing Director and Chief Equity Strategist at Stifel, stated that he expects the U.S. to experience mild stagflation in the second half of 2025 and believes this could lead to a 10% decline in U.S. stocks