Private sector hiring decelerated in March, flashing another potential sign that U.S. economic growth is heading for a sharp slowdown or recession, payroll processing firm ADP reported Wednesday.
Company payrolls rose by just 145,000 for the month, down from an upwardly revised 261,000 in February and below the Dow Jones estimate for 210,000.
That took first-quarter hiring to an average of just 175,000 jobs a month, down from 216,000 in the fourth quarter and a sharp reduction from the average of 397,000 in the first quarter of 2022.
"Our March payroll data is one of several signals that the economy is slowing," said ADP's chief economist, Nela Richardson. "Employers are pulling back from a year of strong hiring and pay growth, after a three-month plateau, is inching down."
Annual pay rose at a 6.9% rate in March, down from 7.2% in February, according to the firm's calculations.
Job growth was almost evenly split between services and goods-producing firms, an unusual occurrence. The U.S. economy is heavily services-oriented, so that sector generally produces much stronger hiring gains. The data released Wednesday showed a gain of 75,000 in services and 70,000 in goods producers.
Last month, though, financial activities lost 51,000 jobs and professional and business services fell by 46,000. Manufacturing also saw a decline of 30,000.
On the plus side, leisure and hospitality added another 98,000 workers, trade, transportation and utilities grew by 56,000, and construction rose by 53,000. Natural resources and mining also showed a gain, up 47,000, while education and health services added 17,000.
From a size standpoint, companies with fewer than 50 workers led with 101,000, a reversal from recent months in which small business saw limited job growth.
The ADP report serves as a precursor to Friday's nonfarm payrolls report from the Labor Department. Though ADP can serve as an indicator of the broader jobs trend, the two numbers can differ substantially. ADP changed its methodology last year, and its count on average was about 100,000 less per month than the government's in 2022.
Economists surveyed by Dow Jones expect Friday's report to show payroll growth of 238,000 in March and the unemployment rate holding at 3.6%.
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April 05, 2023 at 07:15PM
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Private payrolls rose by 145,000 in March, well below expectations, ADP says - CNBC
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