Paul Davidson

USA TODAY

Some economists expect the government to report Friday that hiring slowed in March from a surprisingly strong pace early in the year amid harsher weather and uncertainty about tax and regulatory policies.

Analysts on Wednesday stuck with those measured expectations despite payroll processor ADP’s announcement that businesses added a booming 263,000 jobs last month. Economists surveyed by Bloomberg expect the Labor Department on Friday to tally still-solid gains of 175,000 in the public and private sectors, but that would be down from an average pace of about 237,000 the first two months of the year.

ADP tries to foreshadow Labor’s report but often varies from it noticeably. In February, ADP recorded 298,000 payroll gains among businesses while Labor reported 227,000, and 235,000 total additions, including government hiring.

A big reason the two reports could vary more sharply in March is weather. Unseasonably high temperatures likely pulled forward hiring in sectors such as construction to early in the year, economists say. That could spell relatively subdued job gains in the spring, especially since snowstorms may have posed a further hindrance to job totals in March.

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ADP typically counts employees as working as long as they’re on the payroll, but Labor only includes those who are working when it conducts its survey, notes Jim O’Sullivan, chief U.S. economist of High Frequency Economics. As a result, Labor’s reported payroll gains, unlike ADP’s, could be depressed by weather effects.

“ADP tends to be less responsive to weather-affected hiring either on the upside or the downside,” UBS economist Samuel Coffin wrote in a note to clients.

Some other indicators also hint at a slowdown. Networking service LinkedIn said Wednesday that hiring moderated for the second straight month in March, with employers “taking a slight step back…to see how the economy takes shape in the months ahead.” LinkedIn spokesman Joseph Roulades says strong business confidence in President Trump's proposed cuts in taxes and regulations possibly lifted hiring in January but firms are now taking a wait-and-see approach after some early stumbling blocks to Trump’s agenda in Washington.

Also, a measure of service sector employment fell sharply in March to a seven-month low, the Institute for Supply Management said Wednesday. And initial jobless claims, a gauge of layoffs, trended higher through March, though they remained near four decade lows.

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The average 237,000 monthly job gains reported by Labor this year have soundly beat the estimates of economists who figured the low 4.7% unemployment rate would slow hiring by supplying employers fewer available workers. Many analysts still expect monthly additions to fall back to an average of about 170,000 because of the tight labor market.

In March, ADP said, professional and business services led the broad-based job gains with 57,000. Leisure and hospitality added 55,000; construction, 49,000; health care, 46,000; and trade, transportation and utilities, 34,000.

Manufacturers added 30,000 jobs as the rise in oil prices and an improving global economy continued to stoke a healthy rebound for the nation’s factories.

Some economists are more bullish, believing the robust performance could foretell another month of better-than-expected job growth in Friday’s report.

"The ADP survey is clearly another indication that, despite the apparent slowdown in (economic) growth in the first quarter, labor market conditions have remained unusually strong," economist Andrew Hunter of Capital Economics wrote in a note to clients.