The numbers: Private-sector businesses added 517,000 new jobs in March to mark the biggest gain in six months, ADP said Wednesday, as a decline in coronavirus cases allowed more American businesses to reopen or expand hours.
The surge in employment points to a strengthening U.S. economy that’s being powered by a massive $1.9 trillion federal fiscal stimulus and a sharp decline in coronavirus cases this year as more Americans get vaccinated.
The increase in hiring was close to Wall Street’s mark. Economists polled by Dow Jones and The Wall Street Journal had forecast 525,000 new private-sector jobs.
The ADP report suggests the government will publish similarly rosy employment figures when the official U.S. jobs report is released on Friday.
Economists forecast an increase of 675,000 new jobs in March. The Labor Department report also includes government workers.
What happened: Hiring was broad based.
Mid-sized firms created 188,000 jobs, small businesses added 174,000 employees and large companies filled 155,000 positions.
The increase in employment was particularly strong in areas that were hit hardest by the pandemic. Restaurants, hotels, theaters and other companies in leisure and hospitality ramped up hiring as governments eased restrictions on customer limits and hours of operation.
“This sector has the most opportunity to improve as the economy continues to gradually reopenand the vaccine is made more widely available,” said Nela Richardson, chief economist of ADP.
Hiring also perked up in transportation, health care and manufacturing.
Manufacturers created 49,000 jobs in another strong showing. Old-fashioned heavy industry has led the U.S. recovery since last year.
ADP revised its estimate of new private-sector jobs in February to 176,000 from 115,000. Unusually severe winter weather dampened hiring in that month.
Big picture: The ADP survey is a poor bellwether historically for the government’s official employment report, but there’s no doubt the economy is on the mend again after a winter lull.
The sharp decline in coronavirus cases as more people get vaccinated is the chief reason, but $1,400 federal stimulus checks and massive government spending is adding to the momentum.
The economy is expected to improve rapidly and millions of jobs could be added over the next six months if the coronavirus pandemic remains subdued or cases decline even further. But only time will tell.
What they are saying? “The lifting of [government] restrictions is quickly feeding through to stronger economic activity,” said Michael Pearce, senior U.S. economist at Capital Economics.