WASHINGTON (AP) -- A private survey shows U.S. businesses added a solid number of jobs in February, indicating higher taxes and looming government spending cuts have yet to slow hiring.
Employers added 198,000 jobs in February, according to data released Wednesday by payroll processor ADP (NASDAQ: ADP ) . And the survey revised January's hiring figures to show companies added 215,000 jobs that month, 23,000 more than what had initially been reported.
The figure suggests that the government's February jobs report, to be issued Friday, may come in above economists' forecasts. Analysts expect it will show the economy added 152,000 jobs and the unemployment rate dipped to 7.8 percent from 7.9 percent in January.
Joseph LaVorgna, chief U.S. economist at Deutsche Bank (NYSE: DB ) , boosted his forecast to 180,000 jobs, up from 125,000, in response to the ADP report.
Still, other economists remained cautious. Many think huge snowstorm that shut down several northeastern states last month may drag on overall job gains.
The ADP report is derived from actual payroll data and tracks total nonfarm private employment each month. It doesn't include government jobs, which have steadily declined for the past three years. In the past four months, ADP's data has diverged from the government's estimate of private sector jobs by about 30,000.
Still, February's ADP report shows private employers kept adding jobs in Februray, even after taxes increased and the government moved closer to across-the-board spending cuts.
"Despite the ongoing fiscal uncertainty and the payroll tax hike, the recovery is picking up momentum," Paul Ashworth, an economist at Capital Economics, said in a note to clients.
Social Security taxes rose 2 percentage points Jan. 1 as part of a deal between the White House and Congress to avert larger tax increases. And about $85 billion in spending cuts took effect March 1, which economists expect will lower growth in the summer and fall.
Even so, hiring was broad-based in February across most industries and business sizes.
Mark Zandi, chief economist at Moody's (NYSE: MCO ) Analytics, said one encouraging sign is that small businesses are starting to hire more. Earlier in the economic recovery, which began in June 2009, larger companies with 500 or more employees did most of the hiring. Moody's helps compile the report with ADP.
Small companies with fewer than 50 employees added 77,000 jobs in February. That followed a gain of 123,000 in January for that category, the largest in nearly a year.
The housing recovery is helping drive hiring at smaller firms, Zandi said, such as construction companies, landscaping firms, and plumbers and electricians. Banks are also more willing to lend to small and medium-sized companies compared with several years ago.
Medium-sized companies with 50 to 499 workers added 65,000 jobs in February, and large businesses with more than 500 employees added 57,000.
Construction firms continued a healthy string of hiring, adding 21,000 positions, the ADP report said. Manufacturers added 9,000 jobs.