In February, the private sector added only 77,000 jobs, according to payroll processing firm ADP. This is the lowest increase since July and far below the anticipated 140,000 jobs. It also represents a drop from January’s revised total of 186,000 jobs. Annual pay growth remained steady at 4.7%, the same rate as the previous month.

ADP’s chief economist, Nela Richardson, noted that uncertainty in policies and a slowdown in consumer spending might have contributed to reduced hiring or even layoffs. She added, “Our data, along with other recent reports, suggests that employers are hesitant to hire as they assess the economic outlook.”

The leisure and hospitality sector led job creation with 41,000 new positions. Other sectors showing growth included professional and business services, which added 27,000 jobs, followed by financial activities and construction, each contributing 26,000 jobs. Manufacturing gained 18,000 jobs, and other services added 17,000.

On the downside, the trade, transportation, and utilities sector saw a loss of 33,000 jobs. Education and health services lost 28,000 jobs, while information services shed 14,000. The natural resources and mining sectors saw a decline of 2,000 positions.

In terms of company size, large businesses (those with 500 or more employees) added 37,000 jobs. Mid-sized companies, employing between 50 and 499 workers, added 46,000 positions, while smaller businesses with fewer than 50 employees saw a loss of 12,000 jobs.

The ADP report, released ahead of the Labor Department’s nonfarm payrolls report on Friday, offers an early glimpse of the job market. The government report is expected to show an increase of 160,000 jobs, surpassing January’s gain of 143,000.