Is job growth slowing? Economists are asking that question after ADP’s monthly National Employment Report this morning said 189,000 private sector jobs were created in March, the smallest increase since January 2014.
“There are some good reasons to think that the job growth has slowed, that we’re not going to see monthly job gains of 300,000 for a while,” Mark Zandi, chief economist of Moody’s Analytics, said after the report was released. Moody’s prepares the report in partnership with ADP.
Economists were expecting the report to show about 225,000 new private sector jobs last month, which would have been only somewhat of an improvement over February’s 214,000 new jobs, revised up slightly from an initial 212,000.
Zandi said the lower than expected job growth is evidence “the collapse in oil prices and surge in value of the dollar is hitting the job market.” However, he added, “underlying job growth remains strong enough to reduce labor market slack.”
Friday, the government’s Bureau of Labor Stat9istics releases its initial employment snapshot for March. The consensus of polls of economists expects the report will show both private and government jobs to have increased by about 240,000-245,000. No change is expected in the nation’s 5.5% unemployment rate.
According to the ADP report, small businesses — those with fewer than 50 employees — continued to be the nation’s job engine last month, accounting for 108,000. Those in the middle (50-499 workers) increased headcount by 62,000.
It was the larger employers, those with more than 500 workers, that significantly slowed their hiring from previous months. In March, they added 19,000 new jobs, the smallest number since October.
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ADP said the professional and business services sector added 40,000 jobs, the biggest gain of any sector tracked by the National Employment Report. This sector includes healthcare and temporary staffing. Despite the cold and snowy winter weather that affected much of the Midwest and Northeast in March, construction jobs grew by 17,000. Still, it was the slowest rate of hiring since May 2014.
Manufacturing, which has been adding jobs for more than a year, lost 1,000 jobs. The outlook for the sector has dimmed in recent months. In a separate report today from the Institute for Supply Management, its factory activity index declined in March to 51.1. In February, it was at 52.9. The March reading is down 7 points from the 12-month high in August.
“The U.S. economic recovery is continuing to leak momentum.,” Millan Mulraine, deputy chief economist at TD Securities in New York, told Reuters. “Growth is expected to slow to a crawl in the first quarter.”
SHRM’s LINE report offers a glimmer of optimism that April will see improvement in hiring. The prediction is that hiring in both the manufacturing and services sectors will pickup in the month ahead.