U.S. private employers added back more than half a million jobs in March for the best gain since September, according to a report from ADP on Wednesday. However, job growth still slightly missed expectations, even as February’s inclement weather abated and the domestic vaccination program picked up steam.
Private payrolls grew by 517,000 in March, ADP said in its closely watched monthly report. This followed a revised gain of 176,000 in February, up from the 117,000 previously reported. Consensus economists were looking for domestic private employers to bring back 550,000 jobs during the month, according to Bloomberg data.
The report was “mildly disappointing,” Pantheon Macroeconomics economist Ian Shepherdson said in an email Wednesday morning. However, he noted that it does not change the “improving” big picture for the trajectory of the U.S. economy.
“This report is nothing more than a snapshot of the labor market in early March compared to early February. It tell us nothing about the likely path of payrolls as the economy fully reopens over the next couple months,” Shepherdson said. “We expect 1M-plus payrolls in April, and then substantially bigger increases in May and June.”
In March, the services sector again handily led the way in recovering jobs, with service-providing payrolls climbing by 437,000. Leisure and hospitality industries made the largest advances, with payrolls rising by 169,000. Trade, transportation and utilities jobs also rose by 92,000, and professional and business services jobs rose by 83,000.
The goods-producing sector also posted net private payroll gains in March, with these increasing by 80,000. Construction and manufacturing jobs rose by 32,000 and 49,000, respectively, though mining positions edged lower by 1,000.
Heading into Wednesday’s report, more timely data on the state of the U.S. labor market hinted at an upturn in employment at the beginning of spring. New weekly jobless claims fell to a pandemic-era low last week, as the number of those newly unemployed fell by the most in seven months. Plus, the Conference Board’s latest report this week showed that consumer confidence picked up to a one-year high in March, with stronger consumption trends and increased demand set to engender more hiring.
ADP’s private payrolls report also sets the stage for the U.S. Labor Department’s “official” March jobs report due out on Friday. The ADP report has typically been an unreliable indicator of the results in the government report due to differences in survey methodology, with ADP only counting individuals on active payrolls during the survey period as employed, whereas the Labor Department includes those receiving paychecks during the survey period.
Based on the latest consensus data from Bloomberg, Friday’s report will likely show that non-farm payrolls grew by 650,000 in March, or by the most in five months. The unemployment rate is expected to decline by 0.2 percentage points to a fresh pandemic-era low of 6.0%.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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