WASHINGTON -- Companies in the U.S. added fewer workers than forecast in March, keeping staffing levels in line with a recent slowdown in demand, according to a private report.
Companies added a seasonally adjusted 189,000 jobs last month, payroll processor ADP said Wednesday. That's the first month of gains under 200,000 jobs in 13 months, and it's a decline from 214,000 jobs added in February.
"Job growth took a step back in March," said Mark Zandi, chief economist of Moody's Analytics, which analyzed the survey data. "The fallout from the collapse in oil prices and surge in value of the dollar is hitting the job market. Despite the slowdown, underlying job growth remains strong enough to reduce labor market slack."
Falling oil prices would generally lead to greater consumer spending that fosters hiring. But so far, the ADP survey indicates that steady decline to below $50 a barrel -- a more than 50 percent decline since June -- has led to closed oil rigs, layoffs and fewer orders for pipeline and machinery. That has been coupled with the dollar rising in value against the euro and other currencies, making manufacturers products less competitively priced abroad and crushing multinationals.
The slowdown in hiring was largely concentrated among firms with more than 1,000 employees that would likely have a global footprint.
They added just 12,000 jobs last month, compared to 43,000 in February.
The construction, financial and trade and transportation sectors all reported adding jobs at a slower pace in March than February.
Manufacturers shed 1,000 jobs in March, which likely reflects the twin drags of falling oil prices and a stronger dollar.
The figures come just before Friday's government report, which economists forecast will show an increase of 250,000 jobs.
The ADP numbers cover only private businesses and sometimes diverge from the government's more comprehensive report, which includes government agencies.
Several economists say that the ADP survey can be an unreliable indicator of the government jobs report.
"ADP is far from infallible," said Jim O'Sullivan, chief U.S. economist at High Frequency economics.
U.S. construction spending slipped for the second month in February, pulled down by a drop in single-family home building.
Construction spending fell 0.1 percent in February after a revised 1.7 percent drop in January, the Commerce Department reported Wednesday.
Economists are hopeful for a rebound in the spring and summer as the economy strengthens.
Still, the economists at IHS Global Insight called February's numbers "another poor report" and said in a research note that sluggish construction spending is likely to pull down overall economic growth for the first quarter of 2015.
Last month, the government said that the pace of housing starts plummeted 17 percent in February from January's rate. Home construction slid 56.5 percent in the Northeast and 37 percent in the Midwest, the two regions that endured the brunt of the winter storms.
U.S. factories expanded last month at a weaker pace, with orders growing more slowly and hiring essentially flat.
The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its manufacturing index slipped to 51.5 in March from 52.9 in February.
It was the fifth straight drop. Still, any reading above 50 signals expansion.
A "stronger dollar and soft overseas demand are still an obstacle for export-orientated producers," said Paul Ashworth, chief U.S. economist at Capital Economics, who added that the slowdown wasn't "alarming" because non-manufacturing companies still appear to be faring well.
Still, there is the expectation that manufacturing will rebound as the effects of winter weather and port shutdowns fade. Production improved slightly between February and March, a sign that growth may accelerate in the spring.
"We're well positioned for the distinct possibility of an uptick, an upswing, in momentum as we go forward, not unlike last year when started with a particularly harsh winter," said Bradley Holcomb, chairman of the ISM's manufacturing business survey committee.
One paper products manufacturer said in the survey that business is starting to improve as it's "thawing out of this crazy winter."
Information for this article was contributed by Josh Boak and Paul Wiseman of The Associated Press and Shobhana Chandra of Bloomberg News.
Business on 04/02/2015