The jobs picture brightened considerably in March, as 191,000 new workers were added to private sector payrolls, according to ADP’s National Employment Report.
The HR services firm, which processes payrolls for some 24 million U.S. workers, reported gains in all broad industry categories with the job growth spread almost evenly among employers ranging from the smallest (under 50 employees up by 38,000) to the largest (over 1,000 up by 53,000).
Even though the numbers fell shy of the 195,000 average estimates by economists surveyed by Bloomberg News and Reuters, the report buoyed hopes that the government’s report Friday will be equally robust. Bloomberg’s survey of labor economists and market analysts found they expect the Labor Department will report 200,000 new private sector jobs. Government employment, which is not counted in the ADP report, and which has been shrinking at the federal level, may offset some of those gains.
Economists also expect the unemployment rate to drop slightly to 6.6%.
Financial markets reacted by pushing up the yield on treasury bonds, betting the Federal Reserve may start to raise interest rates next year. The improving jobs picture, coupled with continuing improvement in other economic reports, including this week’s ISM Manufacturing report, and a rise in factory orders, are among the signals being watched by the Fed and market analysts.
“The perception is that nonfarm payrolls are going to be higher than people estimated,” said Thomas di Galoma, head of fixed income rates at ED&F Man Capital Markets in New York.
For the last three months, job growth fell below — sometimes far below — expectations. The Labor Department report showed an average gain of 129,000 jobs. The average for the same three months period a year before was 230,000 jobs.
ADP’s report, prepared by its partner Moody’s Analytics, differs often substantially from what the government report shows. For instance the Labor Department said the economy added 162,000 private sector jobs in February, while ADP initially reported a private sector gain of 139,900 jobs. In the March report this morning, ADP revised that to 178,000. The government report Friday will also contain revised numbers for January and February.
Different methods of data collection are mostly responsible for the differences in the job counts. Nonetheless, the numbers are encouraging.
“The job market is coming out from its deep winter slumber,” said Mark Zandi, chief economist of Moody’s Analytics. “Job gains are consistent with the pace prior to the brutal winter. The gains are broad based across industries and business size classes. Even better numbers are likely in coming months as the weather warms.”
The report showed the following gains:
- Construction 20,000
- Manufacturing 5,000
- Trade/transportation/utilities 36,000
- Financial activities 5,000
- Professional/business services 53,000