US private businesses outperformed job market forecasts in March by adding 184,000 workers, as revealed by today’s ADP employment change print.
This surge marked the most substantial increase in employment in eight months, eclipsing the upwardly revised February figure of 155,000 and prior March forecasts of 148,000.
The service sector was at the forefront of this growth, contributing 142,000 new jobs across various industries. Leisure and hospitality led the charge with 63,000 positions, followed by trade, transportation, and utilities at 29,000.
Additionally, the education and health sector, alongside financial activities, added 17,000 jobs each, with the information sector contributing 8,000. In contrast, the professional and business activities sector lost 8,000 jobs.
The resilience of the US jobs market has thrown a spanner in the works for the three interest rate cuts anticipated from the Federal Reserve this year.
David Morrison, senior market analyst at Trade Nation, said: “Maximising employment is one half of the Federal Reserve’s dual mandate, the other being ensuring price stability. But the strong jobs market continues to worry the Fed.
“They feel a tight labour market will lead to an increase in inflationary pressures if wage growth jumps.”
Swap markets had already started to scale back rate cut expectations following Monday’s hotter-than-expected manufacturing PMI; persistently strong jobs data could result in even more caution in the market.
Kathleen Brooks, research director at XTB, said: "After another strong data report... the market is increasingly expecting fewer rate cuts from the Fed this year, with the first rate cut currently on a knife edge between July and September.
"The market is currently pricing in a 36% probability that the first-rate cut will be in September, this is up from 14% a month ago. The market is becoming increasingly less optimistic about the prospect of near-term rate cuts, and this is having an impact across financial markets."