Private sector job growth rises more than expected in March

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Hiring by U.S. companies rose more than expected in March as the labor market remained resilient even in the face of higher interest rates, according to the ADP National Employment Report released Wednesday morning.

Companies added 184,000 jobs last month, beating both the upwardly revised February gain of 155,000 and the 148,000 increase that economists surveyed by LSEG predicted. It marks the best month for job creation since July.

Wage growth also accelerated last month for workers who switched jobs, with annual pay rising 10% last month – the largest advance since July. For workers who stayed in their job, wages climbed 5.1%, unchanged from the previous month.

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“March was surprising not just for the pay gains, but the sectors that recorded them,” said ADP chief economist Nela Richardson. “Inflation has been cooling, but our data shows pay is heating up in both goods and services.” 

Workers in construction, financial services and manufacturing saw the largest pay bumps in March.

The stronger-than-expected report comes in the wake of an aggressive tightening campaign by the Federal Reserve, which has raised interest rates to the highest level since 2001. Wall Street is watching the labor market closely for signs that it is finally cooling, so the Fed can pivot to cutting interest rates.

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Central bank officials have indicated in recent weeks that they anticipate rate cuts will begin later this year, but need to see more evidence that inflation is returning to their 2% target.

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The data precedes the release of the more closely watched February jobs report from the Labor Department on Friday morning, which is expected to show that employers hired 200,000 workers, following a gain of 353,000 in January. The unemployment rate is expected to hold steady at 3.7%.

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ADP numbers can differ drastically from the official government count and have historically been an unreliable indicator of what’s to come. 

This is a developing story. Please check back for updates.

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