Economic Watch: Private Employment Jumps, Service Sector Growth Slows

Private sector employers in the U.S. added the most jobs during March in more than two years, according to figures released Wednesday, while a separate reported showed economic activity in the service sector has eased a bit.

There were 263,000 job additions last month compared to February, according to payroll processor ADP. That makes for the biggest gain since December 2014 and far exceeds analysts’ expectations. The February total of jobs added was revised down from 298,000 to 245,000. The March performance marked the fifth consecutive month of gains beyond the 200,000 level.

Mark Zandi, chief economist of Moody’s Analytics said, “Job growth is off to a strong start in 2017. The gains are broad based but most notable in the goods producing side of the economy, including construction, manufacturing and mining.”

The goods producing sector was responsible for 82,000 of these jobs, including 49,000 coming from construction and another 30,000 from manufacturing. The other 181,000 jobs were in the service sector.

“The U.S. labor market finished the first quarter on a strong note,” said Ahu Yildirmaz, vice president and co-head of ADP Research Institute. “Consumer dependent industries including healthcare, leisure and hospitality, and trade had strong growth during the month.”

The report comes two days before employment figures from the U.S. Labor Department are released, which covers non-farm employment in both the private and public sector.

The ADP report came on the same day as a separate one was released that showed economic activity in the nation’s nonmanufacturing sector during March grew for the 87th consecutive month, according to the Institute for Supply Management.

The survey by this group representing the nation’s supply managers found non-manufacturing activity during the month fell 2.4% from February as its Non-manufacturing Index (NMI) registered 55.2%, representing continued albeit slower growth in the sector.

"The past relationship between the NMI and the overall economy indicates that the NMI for March corresponds to a 2.4%t increase in real gross domestic product [GDP] on an annualized basis,” said Anthony Nieves, chair of the Institute for Supply Management Non-Manufacturing Business Survey Committee.

He said the majority of respondents’ survey comments indicated a positive outlook on business conditions and the overall economy. However, there were several remarks about the uncertainty of future government policies on health care, trade and immigration, and the potential impact on business.

This latest survey mirrors results seen earlier in the week that showed activity in the nation’s manufacturing sector showed slower growth in March compared to a month earlier.