Private-sector businesses created 455,000 jobs in March, beating forecasts as the recovery charged forward
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- Private-sector payrolls grew by 455,000 in March, ADP said in its monthly hiring report.
- That beat the median forecast of 450,000 jobs and marked a slowdown from February gains.
- March saw the Fed tap the brakes on the economy as inflation lingered at four-decade highs.
Healthy job growth continued for the US private sector in March as the COVID-19 situation improved further and the Federal Reserve started to slow the economy.
Private-sector firms added 455,000 jobs through March, ADP said in its monthly hiring report on Wednesday. That landed just above the median forecast of 450,000 new jobs from economists surveyed by Bloomberg. It also showed job creation slowing somewhat from February's revised increase of 486,000 payrolls.
March offered a stronger environment for employers looking to boost their ranks. Daily COVID-19 cases returned to levels not seen since the summer of 2021. Inflation remained at historic levels through the end of February, but Americans' spending also picked up. The ADP data, while preliminary, suggests the jobs recovery was still robust through the end of the first quarter, and that the economic recovery is far from running out of steam.
"Businesses are hiring, specifically among the service providers which had the most ground to make up due to early pandemic losses," Nela Richardson, chief economist at ADP, said in the report. "However, a tight labor supply remains an obstacle for continued growth in consumer-facing industries."
The leisure and hospitality sector once again gained the most jobs through the month, with such businesses creating 161,000 private payrolls. Education and health services firms added 72,000 jobs, and professional and business services companies followed with a 61,000-payroll gain.
Information businesses saw job creation hold flat through March, echoing previous reports that showed either lackluster job creation or payroll loss.
The report is also the last to cover the period before the Fed started to slow the economy. The central bank raised its benchmark interest rate on March 16 for the first time since the pandemic began, ending the era of near-zero rates and kicking off its process of reining in economic support. The rate hikes aim to quell inflation by driving borrowing costs higher and cooling the economy. Yet they're also expected to slow the recovery by dragging on demand. Gradually rising rates could lead to weaker job creation in the coming months as businesses face higher borrowing costs and slow the pace of rehiring.
That shouldn't be enough to throw the recovery off entirely, Fed chair Jerome Powell said earlier in March. The US already has a "very, very tight labor market," with job openings dramatically outweighing available workers, he said. Recent data suggests the economy is healthy enough to handle higher rates and avoid plunging into another recession, Powell added.
"All signs are that this is a strong economy, one that will be able to flourish — not to say withstand, but certainly flourish — in the face of less accommodative monetary policy," he said.
A report published earlier in the week detailed just how tight the labor market was as March began. Job openings hovered at a near-record 11.3 million through February, according to Job Openings and Labor Turnover Survey, or JOLTS, data unveiled on Tuesday. The ratio of available workers to job openings also held flat at an all-time low of 0.6, signaling there are nearly two listings for every job seeker in the US.
March JOLTS data isn't due for another month, and ADP's report suggests hiring held strong. But with payroll growth gradually slowing, the labor shortage could be a growing headwind for the economic recovery.
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