The United States added 236,000 jobs in March, in a sign of gradual weakening in the labor market as the effects of higher federal interest rates began to be felt in the economy.
Friday jobs a report The availability of data that will significantly influence the Fed’s decision to either halt or continue raising interest rates at the next board meeting in early May.
Friday’s Bureau of Labor Statistics (BLS) report was on par with what economists expected from the labor market as the Federal Reserve raised interest rates. March saw about 75,000 fewer jobs added to the economy compared to February, which was already a decrease compared to the 504,000 jobs added in January. The unemployment rate fell 0.1% to 3.5%.
Fewer jobs were added to leisure, hospitality and healthcare than in previous months, although industries still trended toward job availability. Government, professional and business services continued to grow at a similar pace to previous months.
Ahead of the government jobs survey, other reports gave hints that the job market, while still growing, is cooling down from the high levels seen in the past two years. Employment opportunities in BLS and labor turnover reconnaissance The past week showed that employers are starting to slow the pace of hiring. There were fewer than 10m active jobs by the end of February for the first time in nearly two years.
Payroll company ADP has released National Recruitment a report Wednesday, it shows private employers added 145,000 jobs in March – down from the 261,000 private sector jobs added in February.
Meanwhile, report released Thursday from outside advisory firm Challenger, Gray & Christmas showed job cuts uptick in March. Last month, US employers cut 89,703 jobs – an increase of 15% compared to the 77,770 job cuts in February. The losses were seen mostly in the technology sector, which saw mass layoffs after companies overhired during the pandemic, followed by job cuts in the financial sector.
Ahead of the Friday report, stock markets — which are closed on Friday in observance of Good Friday — wiggle On Thursday, investors were mixed about the upcoming report and what it might mean for interest rates.
The Fed will have to weigh the latest jobs report against incoming inflation news as it decides whether or not to raise interest rates again. Inflation hit a 40-year high last year, and while it is on the decline, it remains stubbornly high.
Fed Chairman Jerome Powell has consistently said that controlling prices is the central bank’s top priority. Despite the banking crisis stemming from the Silicon Valley bank meltdown, the Fed went on to raise interest rates by a quarter point last month, bringing rates to 4.75% to 5% — the ninth consecutive increase and the highest since 2007.
When discussing the Fed’s decision to increase interest rates, Powell cited economic data from January, including the jobs report, which showed that the economy was not slowing as much as the Fed would like.
Powell acknowledged the impact of the banking crisis on the broader economy, but remained adamant about the Fed’s goal of lowering inflation to 2%. Inflation slowed in February to 6%, but Powell said the rate was still far from target. Inflation figures for March will be released on April 12th.
Some economists have criticized Powell for taking such an aggressive approach to reducing inflation, saying that excessive hawkishness could push the economy toward recession.
“The effects of the Fed’s relentless rate hikes are clear: job growth is slowing, and unemployment insurance claims are rising, now exceeding 200,000 a week,” said Chris Baker, chief economist at Groundwork Collaborative. But the labor market is the wrong target for the Fed because workers and their wages didn’t drive inflation – supply disruptions and corporate profits did. Further interest rate increases will bring us closer to a painful avoidable recession.”
However, Powell continued to stress that lowering inflation is the Fed’s priority, and that the recent cooling was not enough.
After the latest quarter-point increase, Powell said at a March 22 news conference, “Inflation is still very high, and the job market is still very tight.” “My colleagues and I understand the hardships caused by high inflation, and we remain strongly committed to bringing inflation down to our 2% target.”