US private employers hired far fewer workers than expected in March, adding to signs that the labor market was cooling.
The ADP National Employment report on Wednesday followed on the heels of government data on Tuesday showing job openings falling below 10 million at the end of February for first time in nearly two years.
Slowing job growth will be welcomed by Federal Reserve officials as they consider whether to pause the central bank’s fastest interest rate hiking cycle since the 1980s.
“While we don’t take too much signal from the ADP report, we think that the softness in the ADP data does provide at least some support for our view that the trend for job growth is moderating,” said Daniel Silver, an economist at JPMorgan in New York.
Private employment increased by 145,000 jobs last month, the ADP National Employment report showed on Wednesday.
Data for February was revised higher to show 261,000 jobs added instead of 242,000 as previously reported.
Economists polled by Reuters had forecast private employment increasing 200,000.
The goods-producing sector added 70,000 jobs, with construction employment increasing 53,000.
But manufacturing payrolls fell 30,000.
There were 75,000 jobs created in the service-providing sector.
The leisure and hospitality industry hired 98,000 more workers while trade, transportation and utilities added 56,000 positions.
But there were job losses in the financial activities as well as professional and business services.
The labor market is slowing as higher borrowing costs dampen demand in the economy.
The government reported on Tuesday that there were 9.9 million job openings at the end of February.
Still, there were 1.7 job openings for every unemployed worker in February, attesting to the labor market’s tightness.
The Fed last month raised its benchmark overnight interest rate by a quarter of a percentage point, but indicated it was on the verge of pausing further rate hikes due to financial market turmoil.
The central bank has hiked its policy rate by 475 basis points since last March from the near-zero level to the current 4.75%-5.00% range.
The ADP report, jointly developed with the Stanford Digital Economy Lab, was published ahead of the Labor Department’s Bureau of Labor Statistics’ more comprehensive and closely watched employment report for March on Friday.
It has not been a reliable gauge in forecasting private payrolls in the BLS employment report.
According to a Reuters survey of economists, the government report is likely to show private payrolls increased by 215,000 jobs in March.
With gains expected in government employment, total nonfarm payrolls are forecast to have risen by 240,000 jobs last month after increasing 311,000 in February.
“We wouldn’t put much weight on the ADP as a predictor of the official payrolls series and we expect the latter to show a 200,000 gain in overall nonfarm employment,” said Andrew Hunter, deputy chief US economist at Capital Economics.
“That said, given the sharp fall in job openings and weakness in most of the surveys, we suspect the main risks to that forecast lie to the downside.”
[Written in collaboration with other media outlets with information from the following sources]
