US employers added just 236,000 jobs in March, which fell short of expectations and indicates that the labor market is cooling amid the Federal Reserve’s year-long campaign of interest rate hikes to cool inflation.
The unemployment rate fell to 3.5%, according to the March jobs report released Friday by the Bureau of Labor Statistics.
Economists had expected a net gain of 239,000 jobs for the month and an unemployment rate of 3.6%, according to Refinitiv. This is the first jobs report in 12 months that came in below expectations.
While the US job market has continued to truck in despite other areas of the economy slowing under the weight of higher interest rates, it is showing some signs of cooling off.
“The labor market came in in March like a lion with a banking crisis and more layoffs, and exits like a lamb with a strong jobs report,” Daniel Gao, chief economist at Glassdoor, said in a statement. “The job market is still strong, but it’s slowly slipping into the ground.”
The March total is a notable drop from February’s 326,000 jobs adjusted up and the huge number of jobs for January — originally 517,000 but later revised to 472,000.
236,000 jobs were added during March, the smallest monthly gain since the decline in December 2020. Excluding losses during the first year of the pandemic, this is the smallest monthly job gain since December 2019.
Industries such as entertainment, hospitality, healthcare and government continued to lead in job gains. Industries posted monthly losses that included retail trade, temporary assistance, manufacturing, construction, and information services.
The Fed wants to see more slack in the labor market: As the economy recovers from the pandemic, demand for workers has far outstripped supply, contributing to higher wages and inflationary pressures.
Participation rates and a workforce that have been slow to match expectations or pre-pandemic levels have contributed to this malaise.
Over the past two and a half years, a lot of ink has been spilled on the question of why workers are “lost”, with Recent research zeroing in COVID-19 deaths and decreased immigration Population aging and prolonged covid as the primary culprits.
The workers are now returning to the labor market.
In February, the labor force participation rate for workers ages 25-54 was 83.2%, surpassing pre-pandemic levels. And last month, the overall labor force participation rate continued its upward trajectory, rising to 62.6% to match a pandemic-era high. But this is still lower than the February 2020 rate of 63.3%.
Average hourly earnings grew 0.3% from the previous month, up slightly from 0.2% in February. On an annual basis, earnings increased moderately to 4.2% from 4.6% in the prior month.
The average workweek fell to 34.4 from 34.5 hours.
“The labor market continues to remain resilient and is a pillar of strength,” Zhao said. “The Federal Reserve is looking for balance in the labor market, and today’s report is a step in the right direction.”
This story is developing and will be updated.