Private sector job growth in the U.S. expanded at a fast pace in March, with companies adding 184,000 workers, according to payroll processing firm ADP. This marks the fastest pace of job growth since July 2023 and is higher than the February gain of 155,000. Wages for workers who stayed in their jobs increased by 5.1% from a year ago, while those switching jobs saw gains of 10%. This increase in wages is a positive sign for the labor market.
The strong job gains in March were broad-based, with leisure and hospitality, construction, trade, transportation, and utilities, and education and health services industries all showing significant increases in employment. Professional and business services, however, saw a loss of 8,000 jobs. The services-related industries accounted for the majority of the job gains, with goods providing the rest. Most of the job growth came from companies that employ more than 50 workers, with small businesses adding just 16,000 jobs.
From a regional perspective, the South saw the biggest gains in employment, adding 91,000 workers. The ADP estimate serves as a precursor to the Labor Department’s nonfarm payrolls survey, which is set to be released on Friday. However, there can often be significant differences between the two reports. Economists expect the March count to show growth of 200,000 jobs. The solid payroll growth, combined with easing inflation, has allowed the Federal Reserve to be patient in its approach to easing monetary policy.
While central bank officials expect to start cutting interest rates later this year, they have stated that they are waiting for more evidence that inflation is on a sustained path lower before beginning reductions. Inflation has been cooling, but ADP’s data shows that wages are increasing in both goods and services sectors. This is a positive sign for workers as it indicates that pay is heating up despite the cooling inflation. Overall, the continued job growth and wage increases in March suggest ongoing strength in the U.S. labor market.
