A call for employment sign is displayed at a Dollar General convenience store on March 10, 2023 in Austin, Texas.
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Private sector hiring slowed in March, another potential sign that U.S. economic growth is headed for a sharp slowdown or recession, payroll processing firm ADP reported Wednesday.
Corporate payrolls rose by just 145,000 for the month, down from an upwardly revised 261,000 in February and below the Dow Jones estimate of 210,000.
That took first-quarter hiring to an average of just 175,000 jobs in the month, down from 216,000 in the fourth quarter and a sharp reduction from the average of 397,000 in the first quarter of 2022.
“Our March payrolls data is one of several signals that the economy is slowing,” said ADP chief economist Nela Richardson. “Employers are pulling back from a year of strong hiring and wage growth, after a three-month plateau, is on the way down.”
Annual wages rose 6.9% in March, down from 7.2% in February, according to the firm’s calculations.
Job growth was almost evenly distributed between services and goods-producing companies, an unusual occurrence. The US economy is strongly service-oriented, so the sector generally produces much stronger employment gains. The data released on Wednesday showed a gain of 75,000 in services and 70,000 in goods manufacturers.
Last month, however, financial activities lost 51,000 jobs, and professional and business services fell by 46,000. Manufacturing also saw a decline of 30,000.
On the plus side, leisure and hospitality added another 98,000 workers, trade, transportation and supplies grew by 56,000, and construction increased by 53,000. Natural resources and mining also saw an increase, up 47,000, while education and health services increased by 17,000 .
From a size standpoint, companies with fewer than 50 workers led with 101,000, a reversal from recent months in which small businesses saw limited job growth.
The ADP report acts as a precursor to Friday’s wage report from the Ministry of Labour. Although ADP can serve as an indicator of the broader job trend, the two numbers can differ significantly. ADP changed its methodology last year, and the number averaged about 100,000 fewer per month than the government’s in 2022.
Economists surveyed by Dow Jones expect Friday’s report to show payrolls rose 238,000 in March and the unemployment rate to remain at 3.6%.