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By Beiyi Seow
US job gains eased in March for a second straight month, government data showed Friday, adding to signs that the world’s largest economy is cooling as policymakers push on in their fight against inflation. online news
The labor market data is closely watched for its potential impact on the Federal Reserve’s policy decisions — but analysts believe the latest figures will not be enough to prompt a pause in the central bank’s interest rate hikes.
The report “shows that we continue to face economic challenges from a position of strength,” said President Joe Biden in a statement, though he conceded that “there is more work to do.”
The country added 236,000 jobs last month, slightly less than expected, while the unemployment rate inched down to 3.5 percent, the Labor Department said Friday.
These numbers came days after separate reports showed hiring by private US companies and services sector activity eased as well.
But wage growth was solid with average hourly earnings rising 0.3 percent to $33.18, according to the latest data.
Compared with a year ago, wages increased 4.2 percent.
“Employment continued to trend up in leisure and hospitality, government, professional and business services, and health care,” said the Labor Department.
The report added that the labor force participation rate continued to move up last month as well.
The figures could bring some relief to policymakers who have been battling to rein in stubborn inflation.
To ease demand, the Fed has lifted the benchmark lending rate nine times since early last year.
Hints of adjustment
“The data show that the labor market remains strong with the economy still creating jobs at a rapid pace,” said Rubeela Farooqi, chief US economist at High Frequency Economics.
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However, there appear to be hints of an adjustment, she added.
This is seen in areas like a higher level of jobless claims and a decline in job openings.
“But with inflation remaining sticky, we anticipate the Fed will hold rates higher for some time, looking for a more significant easing of price pressures,” she said.
For now, softer job growth “will comfort Fed officials that the most aggressive monetary policy tightening in four decades is starting to take effect,” said Oren Klachkin, lead US economist at Oxford Economics.
While the March employment data alone are “nothing like weak enough to persuade the Fed to leave rates on hold in May,” a continued surge in jobless claims, softer retail sales and cooling inflation could tip the balance, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Tighter conditions ahead
Shepherdson also cautioned that March data are effectively a “look back into the pre-SVB world,” noting that the payroll survey was conducted the week after Silicon Valley Bank failed.
This was “far too soon for employers to have responded,” he said, adding that a hit from tighter credit conditions is coming.
The dramatic collapse of SVB and, shortly after, Signature Bank in March unleashed turmoil in the banking sector — prompting US authorities to launch a coordinated effort to prevent contagion.
Although the banking shock itself did not have a massive impact on jobs, Klachkin of Oxford Economics expects that the resultant tightening in lending standards “will weigh on job creation.”
All of this complicates the Fed’s job as the central bank tries to balance its rate hikes to lower inflation against financial stability.
bys/ec
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Total nonfarm payroll employment rose by 236,000 in March, and the unemployment rate
changed little at 3.5 percent, the U.S. Bureau of Labor Statistics reported today.
Employment continued to trend up in leisure and hospitality, government, professional
and business services, and health care.
This news release presents statistics from two monthly surveys. The household survey
measures labor force status, including unemployment, by demographic characteristics.
The establishment survey measures nonfarm employment, hours, and earnings by industry.
For more information about the concepts and statistical methodology used in these two
surveys, see the Technical Note.
Household Survey Data
Both the unemployment rate, at 3.5 percent, and the number of unemployed persons, at
5.8 million, changed little in March. These measures have shown little net movement
since early 2022. (See table A-1.)
Among the major worker groups, the unemployment rate for Hispanics decreased to 4.6
percent in March, essentially offsetting an increase in the prior month. The
unemployment rates for adult men (3.4 percent), adult women (3.1 percent), teenagers
(9.8 percent), Whites (3.2 percent), Blacks (5.0 percent), and Asians (2.8 percent)
showed little or no change over the month. (See tables A-1, A-2, and A-3.)
Among the unemployed, the number of permanent job losers increased by 172,000 to 1.6
million in March, and the number of reentrants to the labor force declined by 182,000
to 1.7 million. (Reentrants are persons who previously worked but were not in the
labor force prior to beginning their job search.) (See table A-11.)
The number of long-term unemployed (those jobless for 27 weeks or more) was little
changed at 1.1 million in March. These individuals accounted for 18.9 percent of all
unemployed persons. (See table A-12.)
The labor force participation rate, at 62.6 percent, continued to trend up in March.
The employment-population ratio edged up over the month to 60.4 percent. These
measures remain below their pre-pandemic February 2020 levels (63.3 percent and 61.1
percent, respectively). (See table A-1.)
The number of persons employed part time for economic reasons was essentially
unchanged at 4.1 million in March. These individuals, who would have preferred full-
time employment, were working part time because their hours had been reduced or
they were unable to find full-time jobs. (See table A-8.)
The number of persons not in the labor force who currently want a job was little
changed at 4.9 million in March and has returned to its February 2020 level. These
individuals were not counted as unemployed because they were not actively looking
for work during the 4 weeks preceding the survey or were unavailable to take a job.
(See table A-1.)
Among those not in the labor force who wanted a job, the number of persons marginally
attached to the labor force was little changed at 1.3 million in March. These
individuals wanted and were available for work and had looked for a job sometime
in the prior 12 months but had not looked for work in the 4 weeks preceding the
survey. The number of discouraged workers, a subset of the marginally attached who
believed that no jobs were available for them, also was little changed over the month
at 351,000. (See Summary table A.)
Establishment Survey Data
Total nonfarm payroll employment increased by 236,000 in March, compared with the
average monthly gain of 334,000 over the prior 6 months. In March, employment
continued to trend up in leisure and hospitality, government, professional and
business services, and health care. (See table B-1.)
Leisure and hospitality added 72,000 jobs in March, lower than the average monthly
gain of 95,000 over the prior 6 months. Most of the job growth occurred in food
services and drinking places, where employment rose by 50,000 in March. Employment
in leisure and hospitality is below its pre-pandemic February 2020 level by 368,000,
or 2.2 percent.
Government employment increased by 47,000 in March, the same as the average monthly
gain over the prior 6 months. Overall, employment in government is below its February
2020 level by 314,000, or 1.4 percent.
Employment in professional and business services continued to trend up in March
(+39,000), in line with the average monthly growth over the prior 6 months (+34,000).
Within the industry, employment in professional, scientific, and technical services
continued its upward trend in March (+26,000).
Over the month, health care added 34,000 jobs, lower than the average monthly gain
of 54,000 over the prior 6 months. In March, job growth occurred in home health
care services (+15,000) and hospitals (+11,000). Employment continued to trend up
in nursing and residential care facilities (+8,000).
Employment in social assistance continued to trend up in March (+17,000), in line
with the average monthly growth over the prior 6 months (+22,000).
In March, employment in transportation and warehousing changed little (+10,000).
Couriers and messengers (+7,000) and air transportation (+6,000) added jobs, while
warehousing and storage lost jobs (-12,000). Employment in transportation and
warehousing has shown little net change in recent months.
Employment in retail trade changed little in March (-15,000). Job losses in building
material and garden equipment and supplies dealers (-9,000) and in furniture, home
furnishings, electronics, and appliance retailers (-9,000) were partially offset
by a job gain in department stores (+15,000). Retail trade employment is little
changed on net over the year.
Employment showed little change over the month in other major industries, including
mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale
trade; information; financial activities; and other services.
In March, average hourly earnings for all employees on private nonfarm payrolls
rose by 9 cents, or 0.3 percent, to $33.18. Over the past 12 months, average hourly
earnings have increased by 4.2 percent. In March, average hourly earnings of
private-sector production and nonsupervisory employees rose by 9 cents, or 0.3
percent, to $28.50. (See tables B-3 and B-8.)
The average workweek for all employees on private nonfarm payrolls edged down by
0.1 hour to 34.4 hours in March. In manufacturing, the average workweek was unchanged
at 40.3 hours, and overtime remained at 3.0 hours. The average workweek for production
and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.9 hours.
(See tables B-2 and B-7.)
The change in total nonfarm payroll employment for January was revised down by
32,000, from +504,000 to +472,000, and the change for February was revised up by
15,000, from +311,000 to +326,000. With these revisions, employment in January and
February combined is 17,000 lower than previously reported. (Monthly revisions result
from additional reports received from businesses and government agencies since the
last published estimates and from the recalculation of seasonal factors.)
The Employment Situation for April is scheduled to be released on Friday,
May 5, 2023, at 8:30 a.m. (ET).