U.S. Companies Add 201,000 Jobs in Sign Labor Market Recovering, ADP Says

Companies in the U.S. added more workers in March, a sign the labor market may be strengthening, data from a private report based on payrolls showed today.

Employment increased by 201,000 workers in March after a revised 208,000 gain in February, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 208,000 gain.

Gains in capital investment and consumer spending are prompting companies like General Motors Co. (GM) to boost staff, helping the U.S. weather the highest energy prices in more than two years. Businesses added 210,000 jobs in March and the jobless rate held 8.9 percent, economists project a Labor Department report to show in two days.

“This data is pointing to a turnaround in labor-market conditions,” Joel Prakken, chairman of Macroeconomic Advisers LLC in St. Louis, which produces the report in conjunction with ADP, said in a conference call with reporters. “It’s pretty clear that employment now has in fact accelerated. Equally encouraging is the breadth of the strength.”

Projections of the 34 economists polled by Bloomberg ranged from gains of 171,000 to 295,000.

Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in June rose 0.5 percent to 1,322.6 at 8:52 a.m. in New York. Treasury securities were little changed.

Fewer Firings

Another report today showed employers announced fewer job cuts in March than the same month last year, even as government payroll cutbacks climbed to the highest level in a year. Planned firings decreased 39 percent to 41,528 this month from March 2010, according to Chicago-based Challenger, Gray & Christmas Inc. Public employees accounted for almost half of all job cuts.

Over the previous six reports, ADP’s initial figures were closest to the Labor Department’s first estimate of private payrolls in February, when it understated the gain in jobs by 5,000. The estimate was least accurate in December, when it overestimated the employment gain by 184,000.

Today’s ADP report showed an increase of 37,000 workers in goods-producing industries, the entire gain reflected a rise in factory payrolls.

Service providers added 164,000 workers, ADP said.

Companies employing more than 499 workers expanded their workforces by 17,000 jobs. Medium-sized businesses, with 50 to 499 employees, created 82,000 jobs and small companies increased payrolls by 102,000, ADP said.

Small Businesses

Paychex Inc., which manages payroll accounting for companies that employ fewer than 100 workers, said checks per client rose 2.8 percent from a year ago in the quarter ended Feb. 28, the biggest gain in at least two years. The data, released with the company’s fiscal third-quarter earnings last week, adds to other evidence showing growing confidence by small businesses.

General Motors is among companies taking on more staff to meet increased demand. The Detroit-based company will recall the last of its laid-off workers by September, United Auto Workers Vice President Joe Ashton said last week.

“We only have about 2,000 people now laid off and those people will all be back to work in September,” Ashton, who handles negotiations with GM, told union workers at the UAW’s Special Convention on Collective Bargaining in Detroit.

The Federal Reserve on March 15 said labor-market conditions “appear to be improving gradually” and the economy was on “firmer footing.’

Overall payrolls, which include government workers, probably rose by 190,000 in March, according to the median forecast of economists surveyed before the Labor Department’s April 1 report.

The ADP report is based on data from about 340,000 businesses employing more than 21 million workers.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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