According to a report released today by ADP Employer Services developed in conjunction with Macroeconomic Advisers, the U.S. labor market showed signs of further recovery in March, as private employers added jobs and planned layoffs fell.
US. private employers added 201,000 jobs in March, which was largely in line with expectations for a gain of 203,000 jobs.
The report signals "across-the-board strength by industry and by size," Joel Prakken, chairman of Macroeconomic Advisors, said on CNBC. In particular, he said the surge in service jobs helps balance the recovery and indicates that critical areas are catching up.
"Initially you'd expect to see manufacturing employment leading the way because that's the most cyclical of the industries," he said. "But without the service sector kicking in eventually, you can't get the sustainable recovery that we're looking for. so these numbers are indeed very encouraging."
Still, Prakken joined economists at JPMorgan Chase, Capital Economics and elsewhere looking for a slowdown in economic gains. He said Macroeconomic Advisors is likely to cut its gross domestic product for the first quarter from 4 percent "into the two and a half percent range, a downside surprise particularly on consumer spending but some other weaknesses as well."
February's figure was revised down to 208,000 from 217,000.
"Basically the number was very much in line with expectations and shows that the labor recovery continues at a reasonable pace," said David Katz, chief investment officer at Matrix Asset Advisors in New York.
"It looks like the U.S. economic recovery continues, and the improving labor market should be a buffer against weak areas like real estate."
The ADP figures come ahead of the government's much more comprehensive labor market report on Friday, which includes both public and private sector employment.
That report is expected to show the economy created about 190,000 jobs in March based on a Reuters poll of analysts, while private payrolls are forecast to rise by 200,000.
A separate report on Wednesday showed the number of planned layoffs at U.S. firms fell in March after spiking up the month before. Employers announced 41,528 planned job cuts this month, down 18 percent from the 50,702 cuts announced in February, according to the report from consultants Challenger, Gray & Christmas.
Overall, 130,749 job cuts were announced in the first three months of the year, marking the lowest rate of downsizing since 1995.
The highest level of job reductions this year has been seen in the government sector, the report noted. Losses are expected to grow as cash-strapped state and local governments deal with budget problems.
Economists often refer to the ADP report to fine-tune their expectations for the government monthly payrolls numbers, though it is not always accurate in predicting the outcome.
The slow recovery in the jobs market has been one of the biggest hurdles to a sustainable economic recovery, but recent data has raised optimism that improvement in employment is strengthening.