Private sector employment in the U.S. rose by much less than expected in the month of March, according to a report released by payroll processor Automatic Data Processing, Inc. (ADP) on Wednesday, with the data raising concerns about Friday's jobs report from the Labor Department.
ADP said private sector employment increased by 158,000 jobs in March compared to economist estimates for an increase of about 205,000 jobs.
While the report also showed that the private sector job growth for February was upwardly revised to 237,000 from 198,000, the job growth for January was downwardly revised to 177,000 from 215,000.
Paul Ashworth, Chief U.S. Economist at Capital Economics, noted that the weaker than expected private sector job growth is likely to prompt speculation of another spring slowdown, particularly in light of Monday's disappointing report on manufacturing activity.
The increase in private sector employment in March was largely due to continued growth in the service sector, which added 151,000 jobs.
Employment in the goods-producing sector increased by a more modest 7,000 jobs in March, as manufacturers added 6,000 jobs.
ADP said the construction industry added no net jobs in March following average monthly gains of 29,000 in the three previous months.
Mark Zandi, chief economist of Moody's Analytics, said the pause in construction employment gains reflected the end of the rebuilding surge in the wake of Superstorm Sandy.
The report also showed that employment at small businesses rose by 74,000 jobs, while large businesses added 47,000 jobs and medium-size businesses added 37,000 jobs.
As mentioned above, the weaker than expected private sector job growth has raised some concerns about Friday's report from the Labor Department, which includes both private and public sector jobs.
"Given the ADP's patchy track record, we are sticking with our existing estimate that the official figures will show a 200,000 increase in non-farm payrolls last month," Ashworth said, "although obviously the risks to that estimate probably now lie on the downside."
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