A call for employment sign is displayed at a Dollar General store on March 10, 2023 in Austin, Texas.
Brandon Bell | Getty Images
Private sector hiring slowed in March, pointing to another possibility that U.S. economic growth is heading toward a sharp slowdown or recession, the payroll processing company said Wednesday.
The company’s payrolls rose by just 145,000 for the month, down from an upwardly adjusted 261,000 in February and below the Dow Jones estimate of 210,000.
That hiring in the first quarter took an average of just 175,000 jobs per month, down from 216,000 in the fourth quarter and down sharply from the average of 397,000 in the first quarter of 2022.
“The payroll data for March is one of several signs that the economy is slowing,” said Nella Richardson, chief economist at ADP. “Employers are pulling back from a year of strong hiring and wage growth, after a three-month plateau, is easing.”
Annual salary increased by an average of 6.9% in March, down from 7.2% in February, according to company calculations.
Job growth has been roughly evenly divided between services and goods-producing firms, which is unusual. The US economy relies heavily on services, so this sector generally produces much stronger employment gains. Data released on Wednesday showed an increase of 75,000 in services and 70,000 in goods producers.
But last month, financial activities lost 51,000 jobs and professional and business services fell by 46,000. Manufacturing also saw a decrease of 30,000.
On the positive side, entertainment and hospitality services added 98 thousand workers, commerce, transportation and utilities grew by 56 thousand, and the construction sector rose by 53 thousand. Natural resources and mining also showed gains, up 47,000, while education and health services added 17,000.
From a volume standpoint, businesses with fewer than 50 workers led at 101,000 workers, a reversal from recent months where small businesses saw limited job growth.
The ADP report is a precursor to Friday’s Nonfarm Payrolls report from the Labor Department. Although ADP can serve as an indicator of broader employment trend, the two numbers can differ widely. The ADP changed its methodology last year, and they average about 100,000 fewer people per month than the government in 2022.
Economists polled by Dow Jones expect Friday’s report to show payroll growth of 238,000 in March and the unemployment rate steady at 3.6%.
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