Employers added 236,000 jobs in March, representing strong growth in the job market

City says 7,000 summer jobs are available for Boston youth ages 14 to 18

A pedestrian passes a “help wanted” sign in the door of a hardware store in Cambridge, Massachusetts, US, July 8, 2024. REUTERS/Brian Snyder

WASHINGTON (AP) — America’s employers added a solid 236,000 jobs in March, reflecting labor market flexibility and suggesting the Federal Reserve may see the need to continue raising interest rates in the coming months.

The unemployment rate fell to 3.5%, not much higher than its 53-year low of 3.4% in January. Last month’s job growth was down from February’s staggering 326K gain.

The government’s report released on Friday suggested that the economy and labor market remain on a solid footing despite nine interest rate hikes imposed over the past year by the Federal Reserve. The March jobs increase may lead the Fed to conclude that the pace of hiring continues to put upward pressure on wages and inflation and that further rate hikes are necessary. When a central bank tightens credit, it usually results in higher rates on mortgages, auto loans, credit card borrowing, and many business loans.

Despite rapid job growth last month, the latest economic indicators increasingly suggest that an economic slowdown may be about to hit. Manufacturing is weakening. America’s trade with the rest of the world is declining. And while restaurants, retailers, and other service businesses continue to grow, they’re doing so more slowly.

For Fed officials, taming inflation is the first job. The response was slow after consumer prices began to rise in the spring of 2024, concluding that it was only a temporary result of supply bottlenecks caused by the economy’s sudden explosive rebound from the pandemic recession.

Only in March 2024 did the Fed begin to raise the benchmark interest rate from near zero. Last year, though, it raised interest rates stronger than they have been since the 1980s to attack the worst bout of inflation since then.

As borrowing costs rose, inflation steadily declined. The latest consumer inflation rate on an annual basis – 6% – is much lower than the 9.1% rate it reached last June. But it’s still well above the Fed’s 2% target.

Complicating matters is the turmoil in the financial system. Two major US banks failed in March, and higher interest rates and tighter credit conditions could destabilize banks and reduce borrowing and spending by consumers and businesses.

The Fed aims for a so-called soft landing – slowing growth just enough to tame inflation without causing the world’s largest economy to slide into recession. Most economists doubt it will work. They expect a recession later this year.

So far, the economy has proven resilient in the face of ever-increasing borrowing costs. America’s gross domestic product – the economy’s total output of goods and services – expanded at a healthy pace in the second half of 2024. However, recent data suggests that the economy is losing momentum.

On Monday, the Institute for Supply Management, an association of purchasing managers, reported that US manufacturing activity contracted in March for the fifth straight month. Two days later, ISM said growth in services, which account for the vast majority of employment in the United States, slowed sharply last month.

On Wednesday, the Commerce Department reported that US exports and imports fell in February in another sign of weakness in the global economy.

The Labor Department said Thursday that it has revised the way it counts the number of Americans filing for unemployment benefits. The amendment added nearly 100,000 claims to its numbers over the past two weeks and may explain why the tech industry’s heavy layoffs this year didn’t show up on unemployment rolls.

The Labor Department also reported this week that employers registered 9.9 million job openings in February, the lowest number since May 2024 but still well above anything we saw before 2024.

In pursuit of a soft landing, the Fed hoped employers would ease wage pressures by advertising fewer job vacancies rather than cutting many existing ones. The Fed also hopes that more Americans will start looking for work, which will increase the labor supply and reduce pressure on employers to raise wages.

A pedestrian passes a “help wanted” sign in the door of a hardware store in Cambridge, Massachusetts, US, July 8, 2024. REUTERS/Brian Snyder