US employers added 236,000 jobs in March, indicating that the economy remains on a strong footing despite the nine interest rate hikes the Fed has imposed over the past year in its bid to tame inflation.
The unemployment rate fell to 3.5%, just above a 53-year low of 3.4% in January.
Meanwhile, some details of Friday’s report from the Labor Department raised the possibility that inflationary pressures may be easing and that the Federal Reserve may soon decide to halt its interest rate increases.
Average hourly earnings rose 4.2% from the previous 12 months, down sharply from a 4.6% year-on-year increase in February.
When measured month to month, wages increased by 0.3% from February to March, up slightly from 0.2% from January to February, but even that figure indicates a slower than average wage increase in the months the last of 2022.
Job creation last month moderated from the 326,000 jobs added in February.
In another sign that may reassure the Fed’s inflation warriors, 480,000 Americans began looking for work in March. Typically, the more job seekers there are, the less pressure employers feel to raise wages, and the result could be easing inflation pressures.
The percentage of people who have or are looking for a job, or the so-called labor force participation rate, reached 62.6% in March, the highest level in 3 years. The share of working-age Americans, or those between the ages of 25 and 54, who have a job, rose to 80.7 percent, the highest point since 2001.
In its report on Friday, the government also revised its estimate of job growth in January and February by 17,000.
“The job market continues to slump,” said Sinem Popper, an economist at jobs firm ZipRecruiter. This should reduce inflationary pressures in the coming months and give the Fed more confidence regarding the inflation outlook.
Job growth last month was led by the leisure and hospitality sector, which added 72,000 jobs.
State and local governments added 39,000 jobs at health care companies, but construction companies cut 9,000 jobs, the first such decline for the sector since January 2022. Factories cut jobs slightly for the second month in a row, reflecting a slowdown in manufacturing in the country. United State.
Although unemployment is still higher for people of color than for white Americans, last month the unemployment rate for black workers fell to 5%—the lowest unemployment rate for African Americans in government records dating back to 1972.
As jobs continue to grow across the economy, many employers are still struggling to fill positions.
A labor shortage of more than two years has led some companies to turn to machines to try to improve efficiency, with Wal-Mart, the country’s largest retailer and private employer, for example, embarking on a major push toward automation.
By fiscal 2026, the company says it expects nearly two-thirds of its stores to be serviced by automation, with the majority of items processed through its warehouse moving through automated facilities. The change will include automated forklifts that unload goods from trailers instead of having workers do manual labour.
Despite healthy job growth last month, the latest economic indicators, according to the Associated Press, point to a slowdown in the economy, which will help ease inflation pressures. Manufacturing is weakening, America’s trade with the rest of the world is declining, and although restaurants, retailers and other service businesses are still growing, they are doing so more slowly.
For Fed officials taming inflation is job one, the response has been slow after prices began rising in the spring of 2021, concluding that it was only a temporary result of supply bottlenecks caused by the sudden economic recovery from the pandemic recession.
Only in March 2022 did the Fed begin to raise the benchmark interest rate from near zero. Despite this, it raised interest rates more strongly last year than they have been since the 1980s to attack the worst bout of inflation since then.
As borrowing costs have risen, so has inflation steadily eased, with the latest 6% annualized consumer inflation rate well below the 9.1% hit in June, but still well above the Fed’s 2% target.
The Labor Department said on Thursday it has revised the way it counts the number of Americans filing for unemployment benefits. The amendment added nearly 100,000 jobless claims to its numbers over the past two weeks and may explain why heavy layoffs in the tech industry this year didn’t show up in the rolls. The unemployment.
The Fed has expressed hope that employers will ease wage pressures by advertising fewer job vacancies rather than cutting many existing jobs.
The March numbers are the last jobs report the Fed will see before its next meeting on May 2-3, but its policymakers will get a clearer view of inflationary pressures next week, when the Labor Department releases price reports at the consumer and wholesale levels.
Some economists hope that the economy will be able to avoid a recession despite the ever-high borrowing rates that the Federal Reserve is designing.
