U.S. Bank Wealth Management Senior Vice President Lisa Erickson analyzes stock movements, the job market and potential ‘further signs of deterioration.’
Hiring by U.S. companies rose more than expected in March as the labor market remained resilient even in the face of higher interest rates, according to the ADP National Employment Report released Wednesday morning.
Companies added 184,000 jobs last month, beating both the upwardly revised February gain of 155,000 and the 148,000 increase that economists surveyed by LSEG predicted. It marks the best month for job creation since July.
Wage growth also accelerated last month for workers who switched jobs, with annual pay rising 10% last month – the largest advance since July. For workers who stayed in their job, wages climbed 5.1%, unchanged from the previous month.
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Signage for a job fair is seen on 5th Ave. in Manhattan, New York City, on Sept. 3, 2021. (Reuters/Andrew Kelly / Reuters Photos)
“March was surprising not just for the pay gains, but the sectors that recorded them,” said ADP chief economist Nela Richardson. “Inflation has been cooling, but our data shows pay is heating up in both goods and services.”
Workers in construction, financial services and manufacturing saw the largest pay bumps in March.
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Job growth was broad-based across sectors last month. The leisure and hospitality sector accounted for the most job gains in March, with the industry onboarding 63,000 new workers. There were also substantial hiring gains in construction (33,000), trade, transportation and utilities (29,000) and financial activities (17,000). Hiring fell in just one sector: professional and business services.
The stronger-than-expected report comes in the wake of an aggressive tightening campaign by the Federal Reserve, which has raised interest rates to the highest level since 2001. Wall Street is watching the labor market closely for signs that it is finally cooling, so the Fed can pivot to cutting interest rates.
Central bank officials have indicated in recent weeks that they anticipate rate cuts will begin later this year, but need to see more evidence that inflation is returning to their 2% target.
Construction workers on a job site on May 5, 2023, in Miami, Florida. ((Photo by Joe Raedle/Getty Images) / Getty Images)
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The data precedes the release of the more closely watched March jobs report from the Labor Department on Friday morning, which is expected to show that employers hired 200,000 workers, following a gain of 275,000 in February. The unemployment rate is expected to hold steady at 3.9%.
ADP numbers can differ drastically from the official government count and have historically been an unreliable indicator of what’s to come.
