U.S. companies stepped up hiring in March for a second straight month, offering fresh evidence the economy was regaining momentum after a weather-driven lull over the winter.
Private employers added 191,000 workers to payrolls last month and 39,000 more were added in February than previously believed, payrolls processor ADP
said on Wednesday.
The signs of solid hiring added to a steady stream of fairly upbeat data that suggests the economy started to accelerate as the grip of an unusually cold winter began to loosen and helps keep hopes alive that the U.S. economy's performance in 2014 will be its best since the recession ended almost five years ago.
“Whatever impact the weather was having is starting to dissipate and we are starting to see the economy gain traction,” said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
The report, which is jointly developed with Moody's Analytics
, was released ahead of the government's more comprehensive report on employment on Friday.
That report is expected to show nonfarm payrolls rose by 200,000 in March, the largest gain in four months, according to a Reuters poll of economists. The poll was taken before the ADP data
was released, but many economists said the ADP report did not shift their views.
A separate report showed small business hiring increased for a sixth straight month in March. The National Federation of Independent Business said small business employment increased by an average of 0.18 worker per firm, up from 0.11 in February.
Prices for U.S Treasury debt fell on the signs of quickened hiring, while the dollar rose against a basket of currencies. Stocks on Wall Street were trading modestly higher.
Signs of improvement in the labor market will be welcomed by the Federal Reserve, which has been scaling back its monthly bond-buying program in a vote of confidence in the economy.
The show of labor market strength could heighten speculation on the timing of the U.S. central bank's first interest rate increase. It has held benchmark overnight lending rates at a record low of zero to 0.25 percent since December 2008.
“For the Fed, employment growth in the 200,000 to 225,000 range will be seen as good enough to justify their current bias for tapering and a pivot towards a 2015 start to policy tightening,” said Millan Mulraine, deputy chief economist at TD Securities
in New York.
Factory orders rebound
The unusually cold and snowy winter was just one factor that hobbled the economy at the end of 2013 and the start of this year. Growth also took a knock from businesses placing fewer orders with manufacturers while working through a pile of unsold goods, and from the temporary drag from the expiration of long-term unemployment benefits and cuts to food stamps.
These factors are expected to lower growth to an annualized pace below 2 percent in the first quarter. The economy expanded at a 2.6 percent rate in the last three months of 2013.
Signs of an economic thaw were also evident in a separate report from the Commerce Department
that showed new orders for manufactured goods jumped 1.6 percent in February, the biggest rise since September.
However, January's orders were revised to show a larger 1.0 percent drop from a previously reported 0.7 percent fall.
Inventories at factories rose 0.7 percent in February, the biggest increase since October 2011. Bullard said that was likely because other businesses were holding the line on their inventory, leaving a buildup at factories.
In another upbeat economic sign, shipments from factories increased 0.9 percent, the largest rise since last July.