Private sector employers added 517,000 positions in March (figure below), ADP said Wednesday, in what may (or may not) be a preview of Friday’s all-important NFP report.
Consensus was looking for 550,000, so the headline was a slight miss, although I doubt it matters. The range was 200,000 to 950,000 and ADP has a spotty track record when it comes to “predicting” NFP in the pandemic era.
February’s 117,000 print was revised higher to 176,000.
With revisions, the number of private sector jobs added in 2021 on ADP’s count is now 889,000.
The breakdown (figure below) shows the gains were broad-based by employer size. Small companies added 174,000 jobs, midsized firms 188,000 and large employers 155,000.
The services sector accounted for 437,000 of the total gain. Obviously, the prospect of a services sector revival is a key pillar of the economic renaissance narrative in the US.
Leisure and hospitality added 169,000 positions in March (figure below). That’s where markets are looking for confirmation on the reopening story.
Joe Biden this week said 90% of Americans will be eligible to get vaccinated within three weeks, and most within five miles of their homes. After that, it’ll be safer to go to restaurants and engage in the type of high-contact, person-to-person activities at the heart of the world’s largest economy.
“We saw marked improvement in March’s labor market data,” Nela Richardson, ADP’s chief economist, said.
“Job growth in the service sector significantly outpaced its recent monthly average, led with notable increase by the leisure and hospitality industry,” Richardson added, noting that “this sector has the most opportunity to improve as the economy continues to gradually reopen and the vaccine is made more widely available.”
That’s it right there, folks. It all hinges on that.
Looking ahead to Friday, if the March NFP print does come in around 640,000 (consensus), it would mean the US economy added nearly 1.2 million jobs in three months, depending on revisions. And yet, we’d still be nearly 9 million short of pre-pandemic levels (figure below).
ADP summed it up. “The groundwork is being laid for a further boost in the monthly pace of hiring in the months ahead,” the release said.
That’s a particularly apt description. We’re pretty much building from the ground up after last year’s apocalyptic purge (red the figure above).
