US companies continued to cut jobs in March, dashing hopes that private sector employers would begin hiring for the first time in two years.
Private businesses cut 23,000 workers this month, according to a survey from ADP employer services. on Wednesday. That failed to meet expectations of Wall Street analysts who were expecting gains of 40,000, but was the smallest monthly total of job losses since February 2008.
“The latest numbers will douse some of the ebullient expectations ahead of Friday’s number, though the trend is still ultimately favourable,” said Alan Ruskin, strategist at RBS Securities.
Producers of goods, such as manufacturers, continued to weigh on the labour market in March, with employment in that sector falling by 51,000. A bright note was the services sector, which added 28,000 workers and marked its second consecutive monthly rise.
The ADP report comes ahead of Friday’s closely watched government non-farm payrolls figures. The US economy is expected to have added 200,000 jobs with the unemployment rate holding steady at 9.7 per cent.
Wednesday’s data could be understated because it does not track census hiring, which is expected to account for 100,000 jobs, and because it does not make adjustments for weather, which depressed February’s official report.
In March, small businesses fared the worst, culling 12,000 jobs. Meanwhile, large companies cut 7,000 workers and mid-sized groups cut 4,000.
Economists have been wary that the jobs market is lagging so far behind the rest of the economy’s recovery and that the growing problem of long-term unemployment could be leading an erosion of skills among displaced workers.
“Roughly nine months after the recession in output finished last year, the economy is still losing jobs,” said Paul Ashworth, senior US economist at Capital Economics. “Yes, employment sometimes lags output by a few months, but not normally by this long.”
Separately on Wednesday, commerce department figures showed that US factory orders climbed by 0.6 per cent to $383.5bn in February after rising by a revised 2.5 per cent the prior month. It was the 10th rise in the last 11 months as businesses have looked to replenish inventories to meet renewed demand.
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