Employers continued adding a high-number of non-farm jobs in March while U.S. factory orders increased broadly in February, but the rebound was less than expected, according to two new reports.
There were 241,000 private sector jobs additions during the month, according to the latest figures from ADP, the fifth straight month the level was at 200,000 or better. The February total of jobs added was revised up from 235,000 to 246,000 by the payroll processor.
“We saw impressive momentum in the first quarter of 2018, with more jobs added per month on average than in 2017,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Midsized businesses added nearly half of all jobs this month, the best growth this segment has seen since the fall of 2014. The manufacturing industry also performed well, with its strongest increase in more than three years.”
The report came two days before the Labor Department releases unemployment figures for March.
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Commerce Department factory report
Meantime, a Commerce Department report showed new orders for U.S. factory-made goods in February increased nearly 1.2% from the month before, nearly erasing January’s 1.3% decline. Despite the improvement, it was below a consensus estimate from Wall Street analysts, who expected a 1.7% gain.
When compared to the same time a year earlier, February’s gain was still impressive, rising 7.9%, boosted in large part to a spike in civilian aircraft orders. There were solid gains in orders for electrical equipment, machinery and primary metals, which offset a slip in computer-related electronics.
Shipments of factory orders recorded their 14th gain in the past 15 months, rising 0.2% in February following January’s 0.7% increase.
Both new orders and shipments of long-lasting manufactured durable goods also moved higher, as new orders also rebounded from a decline in January. Nondurable goods orders declined 0.5% after rising 1% in January
The Commerce Department also revised downward orders for nondefense capital goods excluding aircraft, an indicator of business investment, to show a 1.4% rise, down from a first reported 1.8% improvement. Shipments of these core-capital good increased 1.4% in February, the same as reported a month earlier.
Wells Fargo Securities said the rise in both new orders and shipments of core capital goods “bodes well for equipment spending” when it comes to upcoming first quarter U.S. gross domestic product numbers, but believes it will be less of a boost than the double-digit gains seen in the last half of 2017.
Econoday said “the overall order rise and especially the order rise for capital goods point to manufacturing momentum."
Will tariffs slow growth?
It’s worth noting this report was for the final full month before new tariffs were imposed by the Trump administration on $50 billion worth of Chinese made goods, with China responding with a similar move against U.S. produced items.
Some analysts are concerned this could lead to an escalating trade war between the world’s largest two economies and could also slow down worldwide economic growth.
“Ultimately, this tit-for-tat strategy is to the detriment of both economies. The hope is that tariffs are being used as a tactical approach to force a dialogue regarding the continuous violation of intellectual property rights of U.S. firms that operate in China,” said Beata Caranci, senior vice president and chief economist at TD Economics. “The conciliatory tone of Chinese authorities and the willingness of the U.S. administration to continue with dialogue are positive signs that a further escalation of a trade war can be averted.”
The positive news about manufacturing in February follows reports released a few days earlier that showed March was another good month for the sector.