The U.S. job market beat expectations in March. But zoom in and the picture gets uncomfortable.
Almost every new job came from the same two places - hospitals and hard hats. Take those away, and hiring basically flatlined.
ADP's payroll data showed 62,000 jobs added last month, above the roughly 40,000 that economists were looking for. February's count was also bumped up to 66,000.
The problem is where the jobs are coming from. The health care and education sector was responsible for 58,000 of those hires - the same number as February.
Construction tacked on 30,000 more. That means those two industries alone created 88,000 jobs. The rest of the economy actually lost workers on net.
"Health care is transforming the labor market," ADP's top economist Nela Richardson told CNBC. It's not a one-month blip. It's a two-month pattern that's starting to look structural.
The size split was just as uneven. Businesses with fewer than 50 workers added 85,000 jobs. Companies in the 50-to-499 range lost 20,000. The largest firms cut another 4,000.
Richardson pointed to small firms "playing catch-up" and workers taking on extra jobs just to keep up as costs rise. That's not exactly a sign of strength - it's people scrambling.
Employees who kept their current positions earned 4.5% more than a year ago. People who switched jobs got a 6.6% bump, up slightly from 6.3% the month before.
Friday's government jobs report is the next test. Forecasters are calling for about 59,000 new positions, a sharp reversal from February's 92,000-job drop. Most economists expect the jobless rate to stay flat at 4.4%.
Retail spending rose 0.6% in February, and the ISM manufacturing index showed growth at 52.7. But factory input costs surged to their highest point since mid-2022, with the prices reading jumping nearly 8 points to 78.3.
The headline number looked fine. A job market that depends on one industry and the smallest employers isn't broken - but it's not balanced either.
