ADP: Labor Market Cooling as Employers Add 145K Jobs, Well Below Forecast
The number paled in comparison to expectations of a 210,000 increase.
U.S.News By Tim Smart | April 5, 2023, at 9:05 a.m.
Employers added a paltry 145,000 jobs in March, as the labor market showed signs of slowing from its strong pace of earlier this year, private payroll firm ADP said on Wednesday.
The number was well below estimates of 210,000 and compares with the revised 261,000 jobs gained in February.
“Our March payroll data is one of several signals that the economy is slowing,” said Nela Richardson, ADP chief economist. “Employers are pulling back from a year of strong hiring and pay growth, after a three-month plateau, is inching down”
Financial and business services led the decline, shedding 97,000 jobs. But leisure and hospitality bucked the trend, with an increase of 98,000.
Growth in pay slowed, from 7.2% annual growth in February to 6.9% in March.
The report comes after Tuesday’s release of data showing employers pulled back on job openings in late February, as the number of open positions fell to 9.9 million, the first time it has been below 10 million since May 2022.
“The US labor market is definitively cooling off,” said Nick Buner, Indeed Hiring Lab head of economic research. “We now have two months of data showing a rapid decline in openings, which have fallen by about 1.3 million over the past two months. At this rate, we’d return to a pre-pandemic level of openings by this summer.”
“The layoff rate, however, remains consistently low.” he added. “The rise in layoffs last month seems to have been a head fake, with the aggregate rate still below its 2019 average of 1.2%. This isn’t to say layoffs aren’t increasing in some sectors. The rate in the Information sector, which contains many media and tech companies, rose by almost half a percentage point, to 1.9% in February.”
BCA Research said Wednesday that “fewer job openings – rather than increased separations – are behind the softening in labor market conditions. Notably, the ratio of openings to unemployed dropped from 1.9 to 1.7 in February.”
On Friday, the Labor Department will report the monthly jobs number for March with expectations it will fall to 238,000 from February’s 311,000 reading. Analysts will be watching to see if any of the recent layoff announcements from marquee companies such as Meta, GM and Amazon are reflected in the March employment data.