US private sector adds fewer jobs than expected in March

Private sector employment in the US grew less than expected in March amid trade uncertainty and fading fiscal stimulus, according to data released by the ADP on Wednesday.

Employers added 129,000 jobs last month, missing expectations for a 170,000 rise and marking the slowest employment increase in 18 months. Meanwhile, February's figure was revised up to 197,000 from 183,000.

Small businesses with fewer than 50 employees added 6,000 jobs, while medium-sized businesses with between 50 and 499 employees created an extra 63,000 jobs. Large businesses with 500 or more employees recruited an additional 60,000 people.

The goods-producing sector lost 6,000 jobs, while the services sector recruited 135,000 people, with education/health services making the biggest contribution, at 56,000.

Mark Zandi, chief economist at Moody’s Analytics, said: "The job market is weakening, with employment gains slowing significantly across most industries and company sizes. Businesses are hiring cautiously as the economy is struggling with fading fiscal stimulus, the trade uncertainty, and the lagged impact of Fed tightening. If employment growth weakens much further, unemployment will begin to rise."

Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said: "Although some service sectors showed continued strength, we saw weakness in the goods producing sector."

Paul Ashworth, chief US economist at Capital Economics, said the payrolls figure for March will raise fears that the official non-farm payroll figures on Friday could also come in below consensus expectations for a second month in a row.

"Those official non-farm payroll figures showed that private employment increased by only 25,000 in February. The ADP usually revises its data to bring it more closely in line with the official data but, in this case, February’s gain was revised up to 197,000, from 183,000. That means the ADP figures show a slowdown from February to March.

"There is sure to be a bounce back in the official data given how weak February was, the only question is how big it will be? According to the consensus forecast, non-farm payroll employment is expected to increase by 180,000 in March, but the disappointing ADP figure suggests that our weaker 150,000 estimate will prove closer to the mark."