ADP Employment Reading For March Comes In Better Than Expected

U.S. private employment gains topped market expectations in March. The ADP monthly National Employment Report indicates that the private sector added 200,000 jobs in March, topping consensus analyst expectations of 194,000 jobs.

February’s reported payroll gains were also revised downward from 214,000 to 205,000.

The ADP number is reassuring for investors worried about the impact that global economic weakness is having on the U.S. economy, especially on the heels of Fed Chair Janet Yellen’s cautious speech this week. However, the U.S. Labor Department’s non-farm payrolls report on Friday will paint a much more comprehensive picture of the current state of the U.S. economy.

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Economists are looking for the addition of 197,000 private jobs on Friday, well short of the 230,000 private jobs added in February. The consensus estimate for total non-farm employment is 205,000. In addition, the unemployment rate is expected to hold steady at 4.9 percent.

Despite stock market jitters in early 2016, Moody’s chief economist Mark Zandi believes the ADP number is an indication that the economic expansion is still right on track.

“All indications are that the job machine will remain in high gear,” Zandi said in a statement.

The stock market likes the combo of strong employment numbers and a cautious Fed. The SPDR S&P 500 ETF Trust SPY is up 1.7 percent in the past two days.

Disclosure: the author holds no position in the stocks mentioned.