Payroll processing firm ADP estimates that private-sector firms added 158,000 jobs in March. That comes in well under consensus expectations of around 205,000, according to Bloomberg, and may signal that Friday's March jobs report from the Labor Department will also disappoint. Consensus expectations for March payrolls are just under 200,000.
If private companies added just 158,000 jobs last month, it would be a slowdown from February, when private firms added 246,000 jobs, according to the Labor Department. One reason that ADP's estimate registers a slowdown in job growth is that the company found that construction firms added zero jobs last month.
That's a significant slowdown: ADP showed that monthly construction employment grew by an average of 35,000 from November through February, according to Mark Zandi, chief economist at economic research firm Moody's Analytics, which coproduces the ADP report.
However, Zandi believes that the construction slowdown could easily be temporary and says little about the strength of the job market as a whole.
"My hypothesis is that we may have seen a bit of pop in construction employment, more than you can explain by just a pickup in homebuilding, from rebuilding and repair related to Hurricane Sandy, and some of that employment fell off in the month of March," he said in a Wednesday call with reporters. "If that's the case, underlying job growth has not changed appreciably."
Zandi estimates the underlying job growth at around 175,000 jobs per month.
While construction may have been a weak spot last month, other sectors showed robust growth. Professional and business services added 39,000 jobs in ADP's estimation, and the category of trade, transportation and utilities added 22,000.
Even if the government's March jobs figure comes in around 200,000 as expected, Zandi expects that job growth will slow down considerably in coming months, due in large part to the sequestration cuts that went into effect at the start of March.
"At best we stay at 175K monthly payroll employment gain we've been getting," Zandi said. "I would anticipate some weakening in job growth over the next couple of quarters and over the next six to nine months, something closer to 125K per month."
In addition, plenty of other factors are at work in the job market. Health care reform may be holding back growth as employers work to implement the changes in the law. Zandi points to the requirement that employers with more than 50 full-time workers offer health care coverage; firms that do not offer that already have to find a way to do so by 2014.
Still, one sign of strength may be in the fact that job growth is not any slower; the January end of the payroll tax cut seems to have had a surprisingly small effect on the job market, Zandi said. Without those smaller paychecks, job growth may have been much higher, but the tax hike does not appear to have had an appreciable effect yet on the job market.