Private Payrolls Show Surprise Drop as Recovery Lags

U.S. private employers shed 23,000 jobs in March, missing expectations for an increase in jobs although fewer than the adjusted 24,000 jobs lost in February, a report by a private employment service said Wednesday.

The February fall was originally reported at 20,000.

The median of estimates from 35 economists surveyed by Reuters for the ADP Employer Services report, jointly developed with Macroeconomic Advisers, was for a rise of 40,000 private-sector jobs last month.

Stock futures, around flat prior to the release of the ADP number, quickly turned negative on fears that a turnaround in the jobs market isn't as close as some analysts expected.

ADP's Joel Prakken told CNBC that projections for Friday's nonfarms job report Friday could still show a gain in employment, largely due to government hiring of Census workers and weather-related depression of hiring.

But he also warned that private sector recovery would be slow.

"The economic recovery has not been long enough yet or sustained enough for us to start generating rapid growth in jobs. We're still a few months away from that," he said.

The ADP report is seen as an early indicator of the Labor Department's employment report due out Friday. However, there can be wide variations because ADP only accounts for private-sector jobs.

The disappointing report Wednesday comes on the final day of trading for the quarter.