US employers added 236,000 new jobs in March, as expected, and the unemployment rate fell to 3.5 percent, due to increased participation in the workforce, according to the The most recent employment report from the US Bureau of Labor Statistics.
Monthly job creation was at its lowest since December 2020, a sign that the flexible labor market is finally showing some signs of losing steam amid the Federal Reserve’s efforts to calm inflation by raising interest rates.
After the historic levels of job creation we’ve seen over the past two years, and with concerns about a slowing economy, employers are now more strategic about how and when to add new jobs, said Richard Wallquist, president and CEO of the US company. Staff Association of Alexandria, Virginia.
“The labor market continued to show strength in March despite growing recession fears, with employment numbers gradually rising and unemployment numbers declining slightly,” said Gino Cutolo, president of Adecco North America. “The market continues to be employee-driven, both based on what we’re seeing on a macro level, as well as what we’re seeing on the ground at Adecco,” he said.
“After rising expectations in January and February, job gains rebounded in March, possibly because hiring was delayed earlier in the year due to mild winter weather,” suggested Daniel Zhao, chief economist at Glassdoor. “The labor market has been a mainstay of the expansion so far. While the Fed looks for evidence of the labor market returning to balance, today’s report is a step in the right direction with moderate wage growth but continued job gains and increased labor force participation.”
Nick Pinker, director of North America economic research at Indeed Hiring Lab, added, “The pace of hiring in the past year has lagged far behind. But the average salary gain of 345,000 jobs in the past three months — more than triple the pace needed to keep up with population growth – There is nothing to sneeze on.
Sinem Popper, chief economist at ZipRecruiter, noted that there are clear signs of a broader slowdown in the report, with job gains becoming more narrowly concentrated in fewer industries, and an increasing number of industries shedding jobs. “The slowdown in interest rate-sensitive industries spills over into the rest of the economy,” she said.
Monster economist Giacomo Santangelo said that since inflation remains well above the Fed’s 2 percent target, rates will likely continue to rise. He added that the fight against inflation has, so far, precipitated the failure of many banks. “On the issue of bank collapse, we should not be surprised to see an increase in unemployment in the banking and financial sector,” he said.
Many economists still believe a recession is expected later this year.
“As the number of job openings continues to fall, and more workers move away from the sidelines, it is more important than ever that policymakers shift their thinking away from sustained interest rate increases in the coming weeks that will raise unemployment levels and destroy jobs,” Walquist said.
Hospitality is still trying to make up for the losses
Employment in leisure and hospitality led all sectors again in March, but was still below the pre-pandemic level at about 368,000 jobs.
“Leisure and hospitality again saw the largest gains in March, adding 72,000 new jobs as the industry prepared for summer travel,” Cutolo said. Most of the job growth occurred in restaurants and bars, where employment rose by 50,000.
Government services (47,000 new jobs), professional and business services (39,000), and health care (34,000) also posted strong increases. Retail saw the loss of 15,000 jobs and employers cut 9,000 jobs.
“The three industries that contributed the most to job gains in March were healthcare services, leisure and hospitality, and the public sector, accounting for 72 percent of net new jobs added,” Popper said. “This is consistent with what we see in online job posting data, which shows that consumer-facing industries continue to see strong business. Industries that are more sensitive to higher interest rates or that rely heavily on B2B services have seen a significant slowdown. These industries are enjoying, Such as technology, financial services, construction and temporary assistance services also have a high share of small businesses.
Notably, tech companies continue to create jobs despite the tech layoffs headlines, adding 6,000 jobs in March.
“ManpowerGroup’s real-time data shows that hiring demand is concentrated, with medicine, IT, and sales making up 43 percent of job vacancies, and the most in-demand roles are registered nurses, software developers, drivers, and retail sales workers,” said Becky Frankiewicz. , President and Chief Commercial Officer of ManpowerGroup.
“There is a big reset happening,” she said. “Companies are hiring for specialized skills and in-demand roles that will shape the future. For example, automation management roles—AI engineers, data engineers, data analysts, and cybersecurity professionals—are in demand. In addition to green jobs—particularly those focused on energy and transportation—they testify. great growth.”
Increase workforce participation
The unemployment rate remained near historical lows and labor force participation reached a significant milestone in March. said Michael Farren, a senior research fellow at the Mercatus Center at George Mason University in Arlington, Virginia.
On the other hand, he said, many seniors have retired earlier than usual. “Labor force participation for those 55 and over is about 1.5 percentage points lower than it was before the pandemic – that translates to about 1.4 million fewer workers,” he said.
“The combination of the rapid pace of employment and low unemployment has led to increased labor force participation and higher employment-to-population ratios,” Pinker said. “The percentage of workers ages 25-54 with a job is at its highest level since May 2001. It may have taken longer than many expected, but we are now seeing that strong demand for labor has been and continues to attract more people into the labor market.”
Cooling wage growth
Average hourly earnings increased 4.2% year over year, the slowest pace since June 2024.
“It’s a welcome signal for the Fed, which is looking for signs of easing inflationary pressures in the labor market,” Zhao said.
“It’s clear that wages are now slowing, although it will be important to get confirmation of this trend in other data,” Pinker said. “Mean hourly earnings for all workers grew at an annual rate of 3.2 percent over the past three months, down from 4.9 percent in December, a sharp slowdown faster than the trend in other data.”
Popper noted that wages accelerated in leisure and hospitality, indicating that labor shortages still existed in this sector. “But given the labor force participation rate for non-college degree holders — the largest source of labor supply for the industry — rose from 56 percent in February to 56.3 percent in March, wage growth is likely to moderate in the coming months.”