Economists Wonder: Is Job Growth Slowing?

ADP march 2015Is job growth slowing? Economists are asking that question after ADP’s monthly National Employment Report this morning said that 189,000 private sector jobs were created in March, the smallest increase since January 2014.

“There are some good reasons to think that the job growth has slowed, that we’re not going to see monthly job gains of 300,000 for a while,” Mark Zandi, chief economist of Moody’s Analytics, said after the report was released. Moody’s prepares the report in partnership with ADP.

Economists were expecting the report to show about 225,000 new private sector jobs last month, which would have been only somewhat of an improvement over February’s 214,000 new jobs, revised up slightly from an initial 212,000.

Zandi said the lower-than-expected job growth is evidence that “the collapse in oil prices and surge in value of the dollar is hitting the job market.” However, he added, “underlying job growth remains strong enough to reduce labor market slack.”

Friday, the U.S.  government’s Bureau of Labor Stat9istics releases its initial employment snapshot for March. The consensus of polls of economists expects the report will show both private and government jobs to have increased by about 240,000-245,000. No change is expected in the nation’s 5.5 percent unemployment rate.

According to the ADP report, small businesses — those with fewer than 50 employees — continued to be the nation’s job engine last month, accounting for 108,000. Those in the middle (50-499 workers) increased headcount by 62,000.

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It was the larger employers, those with more than 500 workers, that significantly slowed their hiring from previous months. In March, they added 19,000 new jobs, the smallest number since October.

ADP said the professional and business services sector added 40,000 jobs, the biggest gain of any sector tracked by the National Employment Report. This sector includes healthcare and temporary staffing. Despite the cold and snowy winter weather that affected much of the Midwest and Northeast in March, construction jobs grew by 17,000. Still, it was the slowest rate of hiring since May 2014.

Manufacturing, which has been adding jobs for more than a year, lost 1,000 jobs. The outlook for the sector has dimmed in recent months. In a separate report today from the Institute for Supply Management, its factory activity index declined in March to 51.1. In February, it was at 52.9.  The March reading is down 7 points from the 12-month high in August.

“The U.S. economic recovery is continuing to leak momentum.,” Millan Mulraine, deputy chief economist at TD Securities in New York, told Reuters. “Growth is expected to slow to a crawl in the first quarter.”

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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3 Comments on “Economists Wonder: Is Job Growth Slowing?

  1. Job growth and unemployment numbers alone don’t tell the story. Those economists are right to question job growth, but obviously they are not unemployed or looking for work. Ask the job seeker who is looking for a return to their brand of “normalcy.”

    The aggregate numbers are never an indication of the types of jobs and the wages paid for them. The sectors that have added the most jobs are traditionally the lowest paying, such as retail, food service, administrative, personal and home care. Yes, the unemployment rate is down, but that is a meaningless number as well in isolation. In theory, lower unemployment should at some point should result in wage gains. When companies have a smaller pool of talent to choose from they should offer more attractive salaries. That hasn’t happened and the average hourly wage today is barely keeping up with inflation.

    We need to look at these numbers, but taking any single measure as a sign that things are better or worse is short sighted at best.

  2. The reality is pumping free money into an economy doesn’t ‘stimulate’ it, it just lets the people who get the money first bid away resources from those who get it later. It creates the illusion of economic activity and wealth but in the end real wealth is not created because economizing behaviors are curtailed, not encouraged. Instead the stimulators just sew the seeds for the next bust which happens when the capital misalignments get bad and the free money has to stop for fear of general inflation. That will be happening in the US sooner rather than later, Great Depression 3.0.

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