Private sector job growth in the United States saw a significant increase in March, with companies adding 184,000 workers, the fastest pace since July 2023. This indicates continued strength in the U.S. labor market. Wages for workers who stayed in their jobs increased by 5.1% from a year ago, showing a steady improvement compared to previous months. Those switching jobs saw even larger gains of 10%. Chief economist Nela Richardson noted that pay gains were seen across various sectors, despite cooling inflation.
Job gains in March were broad-based, with leisure and hospitality leading the way with 63,000 new jobs added. Other sectors such as construction, trade, transportation, and utilities, as well as education and health services also experienced significant increases in employment. However, professional and business services saw a loss of 8,000 jobs. Services-related industries accounted for the majority of the job growth, with goods also contributing to the overall increase. ADP’s survey is based on payroll data analysis of more than 25 million workers, focusing on the private sector.
Most of the job growth came from companies employing more than 50 workers, with small businesses adding just 16,000 to the total. The South region led in job gains, adding 91,000 workers in March. The ADP estimate serves as a precursor to the Labor Department’s nonfarm payrolls survey, set to be released on Friday. While the numbers often vary, economists are expecting the March count to show growth of 200,000 jobs. The Federal Reserve has been monitoring economic indicators, such as job growth and inflation, in determining the appropriate time to adjust monetary policy.
Solid payroll growth, coupled with easing inflation, has allowed the Federal Reserve to take a patient approach in easing monetary policy. While central bank officials anticipate cutting interest rates later this year, they have emphasized the need for sustained evidence that inflation is on a downward trajectory before initiating any reductions. The ADP report for March indicates positive momentum in the labor market, which could have implications on the Fed’s decision-making process regarding interest rates. Overall, the job market in the U.S. appears to be robust, with various sectors contributing to job growth and wage increases for workers.
