Greetings, and welcome to the ADP National Employment Report call. During the presentation, all participants will be in a listen-only mode. Afterwards, we'll conduct a question-and-answer session. At that time, if you have a question, please press one followed by four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded Wednesday, March 30th, 2022. I would now like to turn the conference over to Joanna DiNizio with ADP. Please go ahead. Thank you. Good morning and welcome to the March 2022 ADP National Employment Report media conference call. With us is Nela Richardson, Chief Economist at ADP. Nela will share her thoughts on the March findings, which is derived from ADP's actual data of those who are on a company's payroll and produced in collaboration with Moody's Analytics. She'll take as many questions as possible before our hard stop at 9:00 A.M. Eastern Time. Nela, please go ahead. Thank you, Joanna. Good morning, everybody. In March, private sector payrolls grew by 455,000 net. Job growth was broad-based. Goods producers added 79,000 jobs, while service providers added 377,000. The pace for the month is strong, but still down from the more than 500,000 monthly job pace average over the last six months. Year-to-date job gains reached 1.5 million. Other labor data signals that the recovery continues at a solid pace. For example, jobless claims are near the lowest level since September of 1969. That's a signal to us of just how reluctant firms are to lay off workers in the current environment. The mirror image of those low layoffs is the high number of job openings from the recent JOLTS data release, which continued to hover near record highs in February. Now let's turn to the sector analysis. There's some interesting details here. Construction and employment increased by 15,000 in March after averaging a bit over 40,000 job gains over the last six months. Even in the face of strong homebuyer demand, housing remains chronically undersupplied, due in part to a dearth of available workers since the Great Recession in 2007-2009. To me, housing has been a harbinger of how ongoing labor shortages can contribute to persistently low inventory lasting several years. That's something that we're watching very closely. Natural resources and mining payrolls more than doubled their six-month pace this month, with payrolls rising by 9,000 in March, and that's the strongest showing since the pandemic. Despite the recent surge in oil prices, U.S. producers are likely to be hesitant to make significant investments given the uncertainty of the impact of global events tied to the crisis in the Ukraine on energy prices longer term. Rounding out the goods sector, manufacturing has kept a steady pace even in the face of supply chain constraints and upheavals and inconsistencies, and that's due in large part to resiliently strong consumer demand, particularly for durable goods. In March, this sector added 54,000 jobs. That's keeping pace with the average of the last three months. Payrolls in private sector has been the star of the recovery, and it continues to be so, adding 377,000 in March. That's a solid performance, to be sure, but it's a bit of a moderation from the impressive pace set last year. For now, the quarterly average is 408,000. That's about 100,000 off from last year's pace. Now, while the pressure from Omicron has largely been lifted from our service providers, there's still this tight labor supply issue, which remains a significant obstacle to stronger growth in consumer-facing industries. Turning to the sector detail, professional business services added 61,000 jobs in March. And within the sector, high-paying professional service jobs actually had the weakest gain since July 2021, where we saw strength is actually in those lower-paying administrative and support services roles tied to the rise in office reopenings at the start of this year. The education and healthcare sector added 72,000 total jobs, and healthcare was the primary driver again here, gaining 62,000 jobs in March, and this is the second-best performance over the last nine months. Now, while recovery in leisure and hospitality has stayed the course, increasing by 161,000 in March, trade did not hold up as well for the month. The industry added just 49,000 jobs. Finally, financial services have begun to moderate this quarter. The industry added 12,000 jobs in March after averaging 16,000 over the last six months. That being said, initial job losses in the financial sector were relatively small, and payrolls have mostly recovered. Let's highlight the firm size differences. Small businesses rebounded from a downbeat February performance, with firms with less than 50 employees adding 9,000 jobs in March, but only averaging just 28,000 so far this year. On the flip side, larger firms have been booming. Firms with at least 500 employees gained 177,000 jobs in March, and the first quarter average is still really high, 341,000. That's better than the average posted last year. Mid-sized companies also posted a significant improvement in March, adding 188,000 jobs compared to just 23,000 last month. The outperformance of large companies is due in part to the struggle, the continued struggle of firms to find workers. Overall, the labor market continues to make strides this month, though the gains have decelerated from the previous pacing. We're expecting to continue to, but also to moderate as the labor market comes closer to maximum employment. Additionally, strong signals on the labor demand side when it comes to job postings and a low level of layoffs suggest that job gains will be capped not by demand, but somewhat the lack of available or appropriately skilled workers. With those concluding remarks, I'll now return it back to Joanna. Thank you, Nela. Operator, we are ready for questions. Certainly. Ladies and gentlemen on the phone lines, if you would like to register for a question, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. Once again, ladies and gentlemen, it is one-four if you have a question. Our first question is from the line of Lisa Price, Small Business Trends. Please go ahead. Your line is open. Hi. Good morning. I'm of course interested in small businesses and I see that although it showed a nice growth of 90,000, if you compare it to February's loss of 96,000, we're still at a negative 6,000. Meanwhile the larger businesses are booming. It's a labor supply issue I guess. Would you say that in addition to fighting the tight labor supply, the small businesses are facing competition due to what they can afford to offer as far as benefits and things like that? Hi. Yeah. Good morning, Lisa. Thanks for the question. That's absolutely correct. This is a competitive environment for talent. You have job openings that are still hovering near record highs. You still have an elevated level of quits. People who are in the market are changing jobs. There's still that churn. You still have a reduced overall workforce. We're down about 2 million workers from 2020 levels. That makes all of that together a quite competitive market where larger firms with larger budgets are able to compete in the local market a little bit easier than smaller firms. We've seen that dynamic play out most recently with larger firms booming but smaller firms not keeping up. Over the course of last year you saw the pacing more in line regardless of firm size and now you are starting to see some differences. I'll go a step further. Likely you'll see more variance in the smaller firms in terms of monthly employment gains than we'll see in larger firms over the course of the year. If no one else has a question right now, I'd like to continue with another question. I don't wanna hog all the questions. Sure. Sure. Going back to the construction industry and the high number of job openings there, and you described it as the dearth of available workers. Could you also contribute it somewhat to the dearth of construction materials and supplies? Well, there has been this issue in the housing market, especially in residential housing, with tariffs tied to lumber, for example, and steel prices and regulations, and shortages across the construction pipeline. Labor has been persistently an ongoing issue in new home construction. Yes, there have been shortages in terms of just getting the materials needed to build. Then there's the timing issue. You may have the worker, but you have to wait on the lumber. Then you lose the worker, they switch jobs, then you have the lumber. All of that has made it difficult to keep up with what has been some strong demand in the housing market first tied to changes in living arrangements because of the pandemic, but also this humongous tailwind when it comes to demographics and more millennials and even younger buyers ready to purchase their first home now. The housing market is crazy across the country, I think. Yeah. The lack of affordable homes has been something that I know I've been talking about for several years, and it's only been exacerbated by the lack of workers in the skilled trades. As we talk about labor shortages, I'd like to broaden it out to all the different sectors. Right now we're talking most of the dialogue you hear about labor shortages has been on the tone of the number of workers, just the availability. I think as this recovery matures and even beyond the recovery when we're actually adding net new jobs compared to pre-pandemic levels, and in some sectors we certainly are. The narrative will change from the lack of just the number of workers to the lack of the right skill sets, as the structure of business continues to change, more leaning to e-commerce, to digitization and all those technological improvements that have been accelerated over the course of the last two years. Thank you so much. Thanks for the question. Thank you. Our next question is from the line of Anneken Tappe with CNN. Please go ahead. Your line is open. Thank you. Good morning. Hi, Nela. I got on the call a little late this morning. Apologies for that. You probably already mentioned it, but I was hoping that you could elaborate a little bit on the pace of the monthly gains that we've seen moderate. This is the weakest report since August. It's still really, really good compared to pre-pandemic time. Do you think that this is just sort of the trend that we're gonna keep seeing throughout the year as we're moving towards or closer towards full employment? Or do you think this might be a blip, and in the summer as a lot of outdoor activities pick up and so on, we will see a lot stronger hiring again in leisure and hospitality and so on? Good morning, Anneken. Thanks for your question. Yes, we think that there will be some moderation as we get closer to full or maximum employment. Within that there is an underlying tension in the labor market. I'll elaborate on that part of it. We recently got the JOLTS data from the BLS, and it shows the opening rate is still near a record high, so job openings around 7% is that opening rate. It was just over 4% in the five years leading up to the pandemic. We also know that the quits rate is elevated at about 2.9%. The quits rate, though, is still below the hiring rate, and that's where I wanna focus on. That's the number in the middle. That means that people are quitting, but they're generally going to other jobs. They're not leaving the labor market. That hiring rate at 4.4% hasn't changed much, in the last several months. It's hovered between this really tight range of 4.3% and 4.5%, even as the opening rate, the job posting rate, has surged. I think this is what, Chair Powell was referring to when he mentioned an unhealthy level of tightness. We're seeing that tightness play out. Now, it is something to watch. I am not immediately convinced that it resolves itself by the summer. This is something that we're watching, whether this hiring rate, which is very strong if you look at, the history over the last 10 years, this is still some of the highest hiring we've seen. Matched against that opening rate, it still pales in comparison. What we're looking for is for those numbers to come much closer together. We'll see over the course of the year if that actually can happen. All right. Thank you. Yeah. Thank you. Thank you. At this moment I'm showing no further question on the phone lines. Okay. Well, thank you everyone for joining us this month. We look forward to having you here for the next report, which will be released on May 4th. The call is now concluded. Thank you, ladies and gentlemen. That does conclude today's call. We thank you for your participation. Could you please disconnect your line? Have a good day.