- The US added 517,000 private payrolls in March, ADP said in its monthly employment report.
- Economists expected a 500,000-payroll increase. The reading marks a third straight month of gains.
- The report previews government data expected to show a notable jump in hiring through March.
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The US private sector added jobs in March as continued vaccination and the approval of new stimulus reinvigorated the labor market’s recovery.
Private payrolls climbed by 517,000 in March, according to ADP’s monthly employment report. Economists surveyed by Bloomberg held a median estimate of 550,000 payroll additions.
The latest reading is the third straight monthly gain for private-sector employment since payrolls unexpectedly shrank in December. The March gains are also the largest seen since September, just as daily COVID-19 case counts started their climb to winter highs.
The data is “mildly disappointing,” but it should still precede stronger gains through the spring, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said.
“It tells us nothing about the likely path of payrolls as the economy fully reopens over the next couple months,” he said. “We expect 1 million-plus payrolls in April, and then substantially bigger increases in May and June.”
The labor market has slowly resumed its climb to pre-pandemic health after stumbling through the winter surge in virus cases. Warmer weather and the gradual easing of lockdown measures have lifted consumer sentiments and allowed businesses to hire back workers.
The leisure and hospitality and trade sectors boasted the largest increases in payrolls through the month, ADP reported. Firms in the natural resources and mining industry saw modest declines.
Small businesses – those with 49 employees or fewer – added 174,000 payrolls in March. Firms with more than 499 employees took on 155,000 new workers, and medium-sized businesses added 188,000 jobs.
A preview of job growth to come
With more Americans becoming eligible for vaccines, economists largely expect job growth to improve further into the summer. Bank of America economists expect nonfarm payroll gains to average 950,000 a month in the second quarter, a pace that would drag the unemployment rate to 4.7% from 6.2% by the summer. The benchmark rate will then fall to 4.5% by the end of the year and tumble below 4% by summer 2022, the team led by Michelle Meyer said Thursday.
“Stronger growth means a faster healing in the labor market,” they said in a note to clients, adding their projections mean “the employment-to-population will have fully healed by the end of the year.”
Data scheduled for release on Friday will preview whether that strong pace of recovery can be achieved. The Bureau of Labor Statistics’ monthly nonfarm payrolls report will update the US unemployment rate and give a more in-depth view as to how hiring fared in March. Economists expect payrolls to increase by 650,000 and for the unemployment rate to dip to 6%.
The ADP report also comes just hours before President Joe Biden unveils his latest spending package. The White House is expected to push $US2 ($3) trillion in spending on bridges, roads, housing infrastructure, and clean-energy credits, among other initiatives. These projects stand to further boost hiring through 2021 as the economy fully reopens.
The plan is reportedly part of a tw0-part package that could end up with a combined price tag of up to $US4 ($5) trillion. The second part will be announced in the coming weeks, White House Press Secretary Jen Psaki said Monday.