ADP Employment Report: Job Gains Continue in March - But Still Not Healthy

The ADP employment report released today (Wednesday) showed more job gains for March as private companies continued hiring - but remain at a slower-than-necessary rate for a healthy recovery.

According to a report issued Wednesday by payroll-processing company ADP, the private sector added 209,000 jobs last month, pretty much in line with what was expected. That was slightly lower than forecasts for 217,000 jobs gained, and a decrease from 230,000 jobs added in February.

The number was slightly lower than the pace set in February. Industry analysts say the speed of adding jobs needs to move much faster to push unemployment down to a healthy level.

Small businesses, those with fewer than 50 employees, continued to make up about half of all private sector job gains, hiring 100,000 people.

Large companies with 500 or more employees hired 22,000 new workers. Medium-sized businesses added 87,000 to their payroll.

The ADP employment report typically sets the tone for the government's highly anticipated and closely watched monthly jobs report which will be released Friday. The two reports usually mirror each other over the long term, but the figures can deviate month-to-month.

According to surveys conducted by both CNNMoney and MarketWatch, economists expect the Labor Department to show 200,000 jobs added in March, including 210,000 from the private sector, while a loss of 10,000 is forecast in government jobs. Both also expect the unemployment rate to dip slightly to 8.2% from the current 8.3%.

Market participants will have to wait until Monday to react to Friday's report as exchanges will be closed for the Good Friday holiday.

ADP Employment Report: Far from Healthy Job Gains

The debate over whether a return to healthy 5% unemployment is realistic continues to grow.

To get to that level, the United States needs to add 12 million jobs, Sylvia Allegretto an economist at the University of California-Berkley, told Marketplace. The U.S. may have to get used to a "normal" unemployment rate of 6%.

But that is a far cry from the current level, and how long it will take to get there is difficult to predict.

The high unemployment rate has plagued state and local governments causing tax revenues to drop. As a result, they have had to cut all kinds of services, including benefits for people who are unemployed.

The growing numbers of people who are classified as "long-term" unemployed suggests that many are opting for unemployment over "under-employment."

What makes unemployment so hard to bring down is that new people keep entering the labor force, while the productively of those already working goes up, lessening the need for new hires.

To lower the jobless rate, the economy has to grow fast enough to overcome the triple challenges of rising productivity, a growing population and the reentry of workers into the labor force as business conditions improve and hiring prospects improves, Michael R. Englund, a chief economist at Action Economics in Boulder, CO., told Businessweek.

With the ADP employment report job gains falling short of expectations, most economists agree that a healthy job market is still a ways off.

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