The ADP national employment report shows an increase of 77,000 in private payrolls in February, well below the consensus of up 162,000 in the Econoday survey of forecasters. There is a negligible upward revision to 186,000 in January. ADP chief economist Nela Richardson said, Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month. Richardson continued, Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead.

The goods-producing sector added 42,000 jobs in February. There are increases of 26,000 in construction and 18,000 in manufacturing with a 2,000 decrease in natural resources and mining. Service-providers' payrolls are up 36,000 in February with three industries showing declines and four increasing. Payrolls are down 33,000 in trade, transportation, and utilities, down 28,000 in education and health services, and down 14,000 in information. Payrolls are up 41,000 in leisure and hospitality, 27,000 in professional and business services, 26,000 in financial activities, and 17,000 in other services.

Payrolls are down 12,000 for small establishments (1-49 workers), up 46,000 in medium firms (50-499), and up 37,000 at large businesses (500+).

ADP pay insights for February show the average median wage increase for job-stayers is unchanged at up 4.7 percent year-over-year, the same as in January. For job-changers, the average year-over-year increase is up 6.7 percent in February, a bit below up 6.8 percent in January.

Some skilled workers still have an incentive to switch jobs for better pay. Workers with jobs are getting moderate increases. However, businesses are probably only doing what they have to to attract and retain essential employees while assessing their staffing needs in uncertain times.

The consensus looks for ADP private payrolls up 162,000 on the month, not too shabby.

The national employment report from Automated Data Processing Inc. is computed from ADP payroll data and offers advance indications on the U.S. workforce. ADP's data cover more than 500,000 companies totaling more than 25 million employees. The report is produced by ADP Research Institute in collaboration with Stanford Digital Economy Lab.

Market players have become accustomed to the excitement on employment Friday and realize the rich detail of the monthly employment situation can help set the tone for the entire month. While economists have improved their nonfarm payroll forecasts over the years, it is not unusual to see surprises on employment Friday. To that end, the ADP's national employment report can help improve the payroll forecast by providing information in advance of the employment report.

The employment statistics also provide insight on wage trends, and wage inflation is high on the list of enemies for the Federal Reserve. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.

By tracking jobs, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.