ADP Data Not Favoring The Fed? This is what a 'Trader' Needs to Know


Private sector job growth expanded in March at the fastest pace since July 2023, pointing to continued gains in the U.S. labor market, payroll processing firm ADP reported on Wednesday.

Companies added 184,000 workers in the month, an increase from the increase recorded in February which was estimated to have increased by 155,000, which was also the Dow Jones estimate for March.

Aside from the strong job gains, ADP reported that wages for workers who remained on the job rose by 5.1% from a year ago, the same rate as in February after showing a long steady decline through 2023.

Said ADP's chief economist, Nela Richardson. "Inflation has slowed, but our data shows that job growth is picking up in both the goods and services sectors."

Job gains were fairly even, led by the hospitality and hospitality sector with 63,000. Other sectors that showed significant increases included the construction sector (33,000), trade, transport and utilities (29,000) and education and health services (17,000). Professional services and business services suffered a loss of 8,000.

Service-related industries accounted for 142,000 of the total. The ADP study, which is based on an analysis of salary data from more than 25 million workers, does not take government jobs into account.

Most of the growth came from companies with more than 50 employees, with small businesses adding just 16,000 to the total.

The ADP estimate serves as a precursor to the Labor Department's nonfarm payrolls survey, expected to be released Friday, though the numbers often differ significantly. The department's Bureau of Labor Statistics reported job growth of 275,000 in February, or 120,000 more than the revised ADP figure. Economists interviewed by Dow Jones expected the March numbers to show growth of 200,000.

Strong wage growth along with declining inflation will prompt the Federal Reserve to hold off on its approach to easing monetary policy. Central bank officials expect the Fed to start cutting interest rates later this year.