ADP Says Companies in U.S. Added 191,000 Workers in March

Companies boosted payrolls in March by the most in three months, adding to evidence the job market is recovering from a blast of harsh winter weather, a private payrolls report showed.

The 191,000 increase in employment followed a revised 178,000 gain in February that was stronger than initially estimated, according to the ADP Research Institute in Roseland, New Jersey. The median forecast of economists surveyed by Bloomberg called for a 195,000 advance.

The figures show companies are gaining confidence demand will strengthen from earlier in the year when colder-than-normal temperatures and snowstorms prompted Americans to cut back. Further gains in employment and wage growth will help set the stage for a pickup in household spending, which accounts for almost 70 percent of the economy.

“We’re starting to see the recovery in the data that we’ve been hoping for,” Brett Ryan, an economist with Deutsche Bank Securities Inc. in New York, said before the report. “This is going to provide policy makers and market participants alike a modicum of confidence that the data swoon over the last couple months is weather-related and not a sign of something more ominous.”

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Estimates of the 38 economists surveyed by Bloomberg called for gains of 150,000 to 275,000. A Labor Department report due April 4 is forecast to show private payrolls rose by 200,000 in March, economists projected.

Government Figures

ADP’s numbers have missed the mark in tracking government jobs figures over the past couple of months. The group’s initial estimates showed a 127,000 gain in employment for January followed by a 139,000 February increase. That compared with the Labor Department’s initial estimate of a 142,000 gain in January private payrolls and a 162,000 increase in February.

Manufacturers, builders and other goods producers added 28,000 workers in March, today’s ADP figures showed. Employment in construction rose by 20,000 while factories added 5,000 jobs.

Service providers increased payrolls by 164,000 workers.

Companies employing more than 499 workers took on 67,000 workers. Businesses with 50 to 499 employees added 52,000 and small companies increased payrolls by 72,000, ADP said.

The ADP report is based on data from businesses with more than 21 million workers on their combined payrolls.

Auto Sales

Consumer spending is showing signs of rebounding after a lull earlier in the year. Auto sales climbed more than forecast in March, to a 16.33 million annualized rate, the strongest since May 2007, according to data from Ward’s Automotive Group. General Motors Co. and Ford Motor Co. were among automakers yesterday that reported better-than-projected advances in deliveries.

Federal Reserve Chair Janet Yellen said this week that job growth has been “gradual but remarkably steady,” though it hasn’t yet returned to health.

“In some ways, the job market is tougher now than in any recession,” Yellen said. “The numbers of people who have been trying to find work for more than six months or more than a year are much higher today than they ever were since records began decades ago.”

Yellen, in a March 31 speech at a Chicago conference, said the Fed hasn’t done enough to combat unemployment even after holding interest rates near zero for more than five years and boosting its balance sheet to $4.23 trillion with bond purchases.

Labor Slack

Large numbers of partly unemployed workers, stagnant wages, lower labor-force participation and longer periods of joblessness show that “there remains considerable slack in the economy and the labor market,” Yellen said.

Software vendor Red Hat Inc., (RHT) based in Raleigh, North Carolina, has been hiring sales people and engineers amid rising use of cloud computing. The company increased its workforce by 14 percent last year, about 800 workers, and wants to hire another 800 this fiscal year, Chief Financial Officer Charlie Peters said.

“We have a reasonable balance of growth and profit, but there are times in the market when you have to go for it and this is definitely one of them,” Peters said on a March 27 earnings call. “We’re going to be adding engineers, sales people, support people, consultants, trainers to go after this market.”

Other companies, including furnishings manufacturer Herman Miller Inc. and food company H.J. Heinz Co., have been trimming payrolls to cut costs. Customers of Cincinnati-based Cintas Corp. (CTAS), which offers uniform rentals, aren’t increasing their orders, said Mike Hansen, the company’s treasurer.

“We’d like to see certainly more customer hiring but we just haven’t seen the momentum in the economy to be able to provide for that,” Hanson said on a March 19 earnings call.

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net

To contact the editor responsible for this story: Carlos Torres at ctorres2@bloomberg.net Vince Golle

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