Private sector job growth in the US came in slightly stronger than expected in March, though hiring remained narrowly concentrated in a handful of industries, pointing to an uneven labour market as economic uncertainties persist.
Data released by ADP showed that private payrolls increased by 62,000 during the month, exceeding forecasts of 39,000 and only marginally below February’s upwardly revised figure.
The report, which excludes government employment, suggests that while hiring has stabilised, momentum remains limited to select sectors.
Healthcare and construction dominate hiring
As in the previous month, job creation was driven overwhelmingly by healthcare and construction.
Education and health services added 58,000 positions, matching February’s gain, while construction employment rose by 30,000.
The healthcare sector continued to play a pivotal role in supporting labour market growth, particularly after disruptions in earlier months.
February’s figures had been weighed down by a strike involving workers at Kaiser Permanente, which temporarily sidelined more than 30,000 employees.
“Overall hiring is steady, but job growth continues to favor certain industries, including health care,” said Nela Richardson, chief economist at ADP.
She added that “that’s really the story. Health care is transforming the labor market.”
Beyond these sectors, gains were modest.
Information services added 16,000 jobs, while natural resources and mining contributed 11,000. Leisure and hospitality saw a smaller increase of 7,000.
Losses persist in key sectors
Job losses in other parts of the economy offset some of the gains.
Trade, transportation and utilities shed 58,000 positions, while manufacturing employment declined by 11,000.
Despite the uneven sectoral performance, the overall distribution between goods-producing and services industries was relatively balanced.
Goods-producing sectors added 30,000 jobs, compared with 32,000 in services, a rare alignment in an economy typically driven by services activity.
Small businesses lead hiring trend
Hiring patterns also revealed a shift toward smaller firms.
Businesses with fewer than 50 employees accounted for the bulk of job creation, adding 85,000 positions during the month.
In contrast, medium-sized companies reduced their workforce by 20,000, while large firms with more than 500 employees cut 4,000 jobs.
This marks the second consecutive month in which small businesses have led hiring.
Richardson said the trend may reflect smaller firms “playing catch-up,” alongside broader economic pressures such as inflation, which could be driving demand for additional income sources.
Wage growth steady as outlook remains cautious
Wage growth showed signs of stability.
Pay for workers who stayed in their jobs rose 4.5% year-on-year, unchanged from February, while those changing jobs saw wages increase 6.6%, a slight uptick from the previous month.
The ADP report comes ahead of the US government’s official employment data due later this week, which is expected to show a gain of around 59,000 jobs and an unemployment rate holding steady at 4.4%.
While the labour market appears to have settled into a low-hiring, low-layoff phase, economists caution that risks remain.
Rising energy costs linked to the ongoing Iran conflict and broader economic uncertainty could weigh on hiring and potentially lead to an uptick in layoffs in the months ahead.
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