ADP released its March Employment Report Wednesday. The report shows that 158,000 private sector jobs were added to the economy in March. In addition ADP made revisions to reports issued for the two prior months. February’s gain of 198,000 jobs was revised up by 39,000 to 237,000 but January’s 215,000 gain was revised down by 38,000 to 177,000.
It is common for revisions to be made because the monthly report contains some preliminary data and when the final data is received the initial estimate is revised.
As is the case every month the vast majority of the new jobs were added by the service sector which accounted for 151,000 of the new jobs. The goods producing sector added only 7,000 new jobs.
Small busineses added 74,000 jobs
Almost half of the jobs were added by small businesses which hired an additional 74,000 workers last month. Over half of these were added by very small businesses with fewer than 20 employees–44,000 of the 74,000 jobs. Business with 50 employees or more may be holding back on hiring due to the fact they do not want to provide health insurance for their workers.
The fact that small businesses are increasing employment is a sign that the economy is getting stronger. Consumers are once again spending at the local ice cream store, coffee shop, botique, or other business.
Large businesses saw a sizable increase as well. Companies with over 500 employees hired 47,000 net new workers. Medium sized employers hired 37,000 new workers. The fact large companies are now hiring is another good sign for a durable recovery. Those companies held back on hiring new workers and banked their profits for most of the recovery.
Service sector accounted for most jobs
Within industries, companies engaged in professional or business services hired 39,000 new employees. Trade, transportation, and utilities came in second with 22,000. Manufacturing continued to grow adding 6,000. The one surprise was construction which showed no gain over February. Construction has been the driver in the last few month of new employment.
Carlos A. Rodriguez, president and chief executive officer of ADP said in the release “Over the first quarter of 2013, the ADP National Employment Report has reported an average gain of 191,000 new private sector jobs per month.”
Mark Zandi, chief economist of Moody’s Analytics feels that job growth slowed down in March after a robust February report. “Job growth moderated in March, Zandi said. “Construction employment gains paused as the rebuilding surge in the wake of Superstorm Sandy ended. Anticipation of Health Care Reform may also be weighing on employment at companies with close to 50 employees. The job market continues to improve, but in fits and starts.” Zandi added.
ADP is a private employment service that gets its data from a survey of businesses with a cumulative total employment around 40,000. It partners with Moody’ Analytics which use a formula to extrapolate the data. It does not include government jobs in its report.
The “official” jobs report comes from the Bureau of Labor Statistics (BLS). It will be released Friday. That report includes government jobs. Often the two reports vary on private sector jobs because of the way data is collected and the time the “snap hot” was taken.
Sequester impact begins to show
Even though the March numbers were not earth shattering, they still show steady growth for the economy. Keep in mind that there was uncertainty over the sequester and whether the government would shut down at the end of March. That may have dampened some hiring. Also, during March many firms with government contracts either cut staff or prepared to due to sequester. That may be the largest reason for the cooling.
So now we wait for Friday and the BLS report to see the first report after the sequester.
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