Investing.com -- The U.S. private sector added far more jobs than expected in March, pointing to continued strength in the labor market that may impact how Federal Reserve policymakers approach potential interest rate cuts this year.
Private sector employment increased by 184,000 jobs last month, according to data from payrolls processor ADP (NASDAQ:ADP). Economists had forecast jobs growth of 148,000.
It was the largest increase in hiring since July, led by leisure and hospitality. Job gains were strong across industries with the exception of professional services, where hiring fell the report said.
“March was surprising not just for the pay gains, but the sectors that recorded them. The three biggest increases for job-changers were in construction, financial services, and manufacturing,” said Nela Richardson, chief economist, ADP. “Inflation has been cooling, but our data shows pay is heating up in both goods and services.”
For job-stayers, year-over-year pay gains were flat at 5.1% after months of steady deceleration. At the same time, gains for job-changers rose dramatically to 10%, the second straight increase.
The ADP numbers serve as a precursor to the all-important non-farm payrolls report due out on Friday, which will offer further insight into the health of the labor market.