Private business job creation decelerated in March as an economic slowdown and other factors put a dent in activity, according to the latest report from ADP.
Companies added 189,000 positions for the month, down from the 214,000 in February, a number that was revised slightly upward from the 212,000 initially reported.
Virtually all the new positions came from the service sector, with the majority of those concentrated in small business. Services added 184,000, with goods-producing responsible for just 5,000, according to the report that ADP puts together in conjunction with Moody’s Analytics.
It marked the first time since January 2014 that private firms added fewer than 200,000 jobs.
Officials involved with the report attributed the slowdown to falling energy prices and currency pressures.
“The fallout from the collapse in oil prices and surge in the value of the dollar is hitting the job market,” Moody’s economist Mark Zandi said in a statement. “Despite the slowdown, underlying job growth remains strong enough to reduce labor market slack.”
The report comes two days before the government releases its monthly nonfarm payrolls report. That report is expected to show a gain of 248,000 positions, though economists sometimes tweak that number depending on ADP.
“The (ADP) survey proved to be far too pessimistic in February and we wouldn’t rule out a repeat of that pattern in March,” Paul Ashworth, chief U.S. economist at Capital Economics, said in a note. Indeed, the initially reported 212,000 from ADP fell well short of the 295,000 number from the Bureau of Labor Statistics two days later.
The anemic goods-producing number represented a decline of 22,000 positions from February. Manufacturing lost a net 1,000 jobs after adding 2,000 the previous month.
Even the level of service jobs was a monthly decline, dropping from 192,000.
Small businesses did their part, adding 108,000 positions, which was 5,000 more than February. Medium-sized companies, with 50 to 499 employees, added 62,000 compared to 57,000 the previous month. Large firms brought the biggest decline, tumbling from 53,000 to 19,000.
The disappointing numbers come as economic growth is falling short of earlier lofty expectations. Economists have been paring back expectations, with most economists now expecting gross domestic product growth to come in below 2 percent for the first quarter.
Corporate earnings also are taking a hit, with S&P Capital IQ expecting a decline in S&P 500 profits of about 3 percent in the first quarter and nearly 2 percent in the second.
Federal Reserve officials, in the meantime, have been sending signals that an interest rate increase is on the horizon, further complicating the economic and market landscape. Stock market indexes have been volatile amid the crosscurrents, with the S&P 500 posting a modest 0.44 percent gain on the year.