Inside the ADP Report – March's job growth

Inside the ADP Report – March’s job growth

Bottom Line: Before I breakdown what happened in March here’s my first takeaway for tomorrow’s government employment report. Massive upward jobs revisions for February are coming. When the extremely disappointing report came out last month that led to some economists freaking out, I mentioned it would happen. Now that we have this month’s ADP Report confirming 197,000 private sector jobs were added during the month it’s a given. Government numbers are almost always heavily revised, but the partial government shutdown really seemed to thro off their reporting last month. With that being said March’s growth was meh. 

  • +129,000 private sector jobs

That’s a status quo kind of number – not something that’s impressive. It’s the lowest private sector jobs growth since the fall of 2017. The question is if growth is lower because of companies having a hard time finding qualified talent to hire with near record low unemployment or if companies just aren’t looking to hire as much. That won’t be clear until we’re a little further down the line. Still, we’re averaging 197,000 new jobs per month through the first quarter of 2019. That is solid growth – especially with a tight labor market. 

Where were the jobs added in March?

  • Small businesses: +6,000
  • Medium sized businesses: +63,000
  • Large businesses: +60,000

And here’s the question mark. Hiring was solid for medium and large companies but clearly not where we want it to be with small businesses. So, the question is... Did they not hire because they’re having trouble competing with larger companies over talent as was the case during parts of 2018, or did they not need to hire? This is the second straight month we’ve seen this happen. Not quite a trend but it’s getting there. It’s worth watching. Where the jobs were added... 

  • #1 Education and healthcare
  • #2 Professional and business services
  • #3 Leisure and hospitality

We saw construction and manufacturing jobs take a dip in March. That’s also potentially concerning but it’s the first month that’s been the case. What’s all of this mean? Economic growth is almost certainly pacing below last year which is expected. The question is how much. Watch small businesses next month. That’ll be key. Mid-size companies are still in the sweet spot of the economy and large companies are doing just fine. 

 

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