Private sector added 158,000 jobs in March

Small businesses continued to lead the way in hiring, adding nearly half the positions — 74,000 — a positive shift from the early part of the recovery that saw smaller firms struggle to regain their footing.

{mosads}The services sector made up the bulk of the increase, with 151,000 jobs added last month. 

Zandi pointed out that job growth remains broad-based across sectors and company sizes — another positive in the data.

But the construction sector didn’t add any net jobs last month, following average gains of 29,000 in the three months prior. 

“It’s hard to know exactly what is going on,” Zandi said. 

He estimated that rebuilding from the effects of Hurricane Sandy fell off along with slower home building, which has been picking up in recent months. 

Manufacturers hired 6,000, the report showed. 

Construction has been picking up in tandem with the housing sector’s recovery. 

ADP said the average gain during the first three months of the year is 191,000. 

Still, Zandi there are several factors that could weigh on the job market in the next six to nine months, as well as the long term: mainly the $85 billion in automatic spending cuts, as well as healthcare reform law’s implementation. 

He said healthcare reform may already be affecting firms that have around 50 employees and want to remain under that level to avoid mandatory health insurance requirements under the law. 

“It looks like companies around that threshold are looking to stay under the threshold,” he said. 

Zandi called the trend “worrisome” and a major factor that needs to be carefully watched. 

“It’s still early and there are a lot things going on in the data,” he said. “We don’t want to draw too strong a conclusion but it’s having some impact and we will watch that carefully through the year.”

The across-the-board spending cuts that went into effect on March 1 are expected to hit the job market this summer and could affect the number of hours worked because of mandatory government furloughs, he said. 

The sequester could knock down job growth to as low as 100,000 a month. 

“The next six to nine months will be tricky,” he said.

—This story was updated at 9:20 a.m.