ADP National Employment Report Crushes Estimates for Second Straight Month

The ADP National Employment Report found the private sector added 265,000 jobs in March, far more than the 185,000 expected by economists for the month. The ADP report offers renewed optimism for wages, as job creation not only exceeded expectations but was also broad-based.

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

This is the second straight month and the first two under President Donald J. Trump where the ADP National Employment Report crushed the median forecast expected by economists.

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

Worth noting, the vast majority of jobs created in the private sector under the previous U.S. administration came from the lower-paying end of the service sector, while the higher-wage paying sectors struggled and even lost ground. In March, the ADP National Employment report showed the manufacturing sector added 30,000 jobs, while construction added 49,000.

Last month, the two industry sectors added 32,000 and 66,000 new jobs, respectively. Even mining added 4,000 new jobs in March, after the trend line for the previous years since the Great Recession showed consistent losses.

The first Manufacturers’ Outlook Survey since President Donald Trump took office released last week found a “dramatic shift in sentiment” to the highest level ever measured. The National Association of Manufacturers (NAM) survey found more than 93% of manufacturers feeling positive about their economic outlook.

The service sector added 181,000, roughly the average we’ve been seeing. Leisure and hospitality, a notoriously low-wage sub-sector, represented 55,000 jobs and another, franchise, was only 13,900.

That’s an indication that even the service sector is adding more wage-growth friendly positions while the remaining sectors of the economy fill out. Higher-paying sub-sectors of the services industry, including professional and business services represented 57,000 new jobs, while trade/transportation/utilities represented a healthy 34,000.

For the second straight month, private sector job creation also appeared to continue to return to the historical norm relating to the majority coming from small- and medium-size businesses. Small businesses added 118,000 jobs in March, including 60,000 from businesses with 1-19 employees and 58,000 from businesses with 20-49 employees. Medium-size businesses, or those with 50-499 employees, added 100,000 jobs.