*

Smallest U.S. businesses shed 125,000 jobs in February,

Intuit

data show

*

Leisure and hospitality sector sees largest job decline,

indicating economic strain

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Federal Reserve notes risks to growth amid consumer

spending

drop

By Howard Schneider

WASHINGTON, March 4 (Reuters) - The smallest U.S.

businesses shed jobs in February and average revenue fell, a

sign of pressure in one vulnerable sector of the economy that

preceded the Trump administration's announcement of sweeping new

import taxes that could make the outlook even cloudier.

An index developed by software firm Intuit, which

provides payroll and other business software to companies,

estimated that employment at firms with one to nine workers fell

by around 125,000 over the month, to 12.5 million, a nearly full

percentage point decline.

While spanning industries, the drop was proportionately

largest in leisure and hospitality, where employment fell by

around 21,000, or nearly 1.3%.

Leisure and hospitality is particularly sensitive to

consumer discretionary spending, and the decline is a possible

sign of economic strain developing among households.

Average inflation-adjusted revenue fell nearly $51,000, or

-0.79%, according to the latest Intuit data, derived from

analysis of 440,000 firms that use the company's payroll

software.

Ufuk Akcigit, a University of Chicago professor who

developed the index for Intuit, said small firms "are typically

the early indicators of what's going to happen ... Wherever

things are going, it's typically visible among small business."

Payroll data for February will be released on Friday, and

analysts expect another solid reading. Economists polled by

Reuters anticipate firms added 160,000 jobs and the unemployment

rate remained at 4%.

But Federal Reserve officials have begun flagging possible risks

to growth, noting a January drop in personal consumption

spending and weaker readings on consumer confidence.

The February employment survey also came too early,

economists said, to capture developing layoffs by the federal

government and affiliated private contractors, and before the

Trump administration announced new tariffs that could also

influence business hiring plans.