According to a report released on Wednesday by payroll processing company ADP, private-sector hiring slowed down in March, possibly indicating yet another dramatic downturn or recession in the U.S. economy.
Employer payrolls increased by just 145,000 for the month, less than the upwardly revised 261,000 in February and the 210,000 predicted by Dow Jones.
This reduced first-quarter hiring to just 175,000 jobs each month on average, down from 216,000 jobs on average in the fourth quarter and a significant decrease from the average of 397,000 jobs on average in the first quarter of 2022.
Nela Richardson, the chief economist at ADP, said: “Our March payroll data is one of several signals that the economy is weakening. Employers are slowing down after a year of aggressive hiring, and pay growth has plateaued for three months.
The firm’s figures show that annual compensation increased at 6.9% percent in March, down from a 7.2% rate in February.
Unusually, job growth was split almost equally between businesses that produce goods and services. Since the U.S. economy is predominately service-based, hiring growth in that industry is typically significantly stronger. According to figures released on Wednesday, there were 75,000 more service providers and 70,000 more producers of goods.
However, financial activities lost 51,000 jobs last month, and professional and business services saw a 46,000-job decline. Manufacturing also had a 30,000 decrease.
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On the good side, trade, transportation, and utilities increased by 56,000, construction increased by 53,000, and leisure and hospitality added another 98,000 employees. Natural resources and mining also reported a boost, up 47,000, while education and health services added 17,000.
Companies with fewer than 50 employees came in first in terms of size with 101,000, reversing recent months when tiny businesses only experienced modest job gain.
The ADP report provides as a preview of the Labor Department’s nonfarm payrolls report on Friday. Despite the fact that ADP can be used as a gauge for the overall employment trend, the two figures might vary greatly. After altering its methodology the previous year, ADP’s count in 2022 averaged around 100,000 fewer people per month than the government’s.
According to economists surveyed by Dow Jones, the payroll increase for March was 238,000, while the unemployment rate remained at 3.6%.