A “Now Hiring” sign is posted on a storefront in New York City on August 5, 2022.
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Private sector hiring slowed in March, another possible sign U.S. economic growth is headed for a sharp slowdown or recession, payrolls firm ADP reported on Wednesday.
Corporate payrolls rose just 145k this month, compared to an upwardly revised 261k in February and below the Dow Jones estimate of 210k.
That averaged just 175,000 jobs per month in Q1, compared to 216,000 in Q4 and a sharp drop from the average of 397,000 in Q1 2022.
“Our March payroll data is one of several signals that the economy is slowing,” said ADP chief economist Nela Richardson. “Employers pull back from a year of strong hiring and wage growth slows after a three-month plateau.”
Annual wages rose 6.9% in March, compared to 7.2% in February, according to the company’s calculations.
Job growth was almost evenly split between service and manufacturing firms, an unusual occurrence. The US economy is heavily service-oriented, so this sector generally has much stronger hiring growth. Data released on Wednesday showed a 75k gain in services and 70k in commodity producers.
However, last month the finance sector lost 51,000 jobs and freelance and business services fell by 46,000. Manufacturing also saw a 30,000 drop.
On the plus side, leisure and hospitality added another 98,000 workers, trade, transport and utilities grew by 56,000 and construction grew by 53,000. Natural resources and mining were also up 47,000, while education and health services were up 17,000.
From a size standpoint, companies with fewer than 50 employees led by 101,000, a reversal from recent months when small companies saw limited job growth.
The ADP report serves as a precursor to the Labor Department’s Payroll report due out on Friday. Although ADP can serve as an indicator of the broader employment trend, the two figures can differ significantly. ADP changed its methodology over the past year, and its number has averaged about 100,000 fewer per month than the government’s in 2022.
Economists polled by Dow Jones expect Friday’s report to show March jobs growth of 238k and an unemployment rate of 3.6%.