An employment sign is displayed at a restaurant in Prospect Heights, Illinois, Tuesday, April 4, 2023. On Friday, the US government released the jobs report for March. (AP Photo/Nam Y. Huh)
WASHINGTON (AP) — America’s employers added a solid 236,000 jobs in March, suggesting the economy remains on a solid footing despite the Federal Reserve’s nine rate hikes over the past year as it seeks to tame inflation.
The unemployment rate fell to 3.5%, just above a 53-year low of 3.4% in January.
At the same time, some details Friday’s report from the Department of Labor He raised the possibility that inflationary pressures may abate and that the Fed may soon decide to pause interest rate hikes. Average hourly wages increased 4.2% from the previous 12 months, down sharply from a 4.6% year-over-year increase in February.
When measured month-to-month, wages rose 0.3% from February to March, up slightly from 0.2% from January to February. But even that figure indicates slower than average wage increases in the final months of 2024.
Last month’s job gains were a moderation of 326,000 jobs that have been added in February.
“Today’s report is the Goldilocks report,” said Daniel Zhao, chief economist at Glassdoor. “It’s hard to find a way that could have been better. We’re seeing the job market cooling, but it’s still resilient.”
And in another sign that may reassure the Fed’s inflation warriors, 480,000 Americans began looking for work in March. Typically, the more job seekers there are, the less pressure employers feel to raise wages. The result could be relief from inflationary pressures.
The percentage of people who have or are looking for a job – the so-called labor force participation rate – reached 62.6% in March, the highest level in three years. And the share of working-age Americans — those ages 25 to 54 — who have jobs rose to 80.7%, the highest point since 2001.
“Americans, in general, are looking for and finding work,” Zhao said.
In its report on Friday, the government also revised its estimate of job growth in January and February by 17,000.
“The job market continues to soften. This should reduce inflationary pressures in the coming months and give the Fed more confidence regarding the inflation outlook,” said Sinem Popper, an economist at jobs firm ZipRecruiter.
Job growth last month was led by the leisure and hospitality category, which added 72,000 jobs. Among the industries in this sector, restaurants and bars gained 50,000.
State and local governments added 39,000 Health care companies 34,000. But construction companies cut 9,000 jobs, the first such decline in the sector since January 2024. Factories cut jobs slightly for the second month in a row, reflecting slowing manufacturing in the United States.
Although unemployment remains higher for people of color than for white Americans, last month the unemployment rate for black workers fell to 5% — the lowest unemployment rate for African Americans in government records dating back to 1972.
As jobs continue to grow in the economy, many employers are still struggling to fill positions.
In the Outer Banks, North Carolina, Clark Tweedy said his family business, which sells real estate and helps homeowners rent out vacation homes, still faces what he calls “the narrowest job market of anyone’s lifetime.”
Twiddy & Co. sharply raised entry-level salaries for seasonal workers — it employs 500 to 600 a year — to $18 to $20 an hour from $13 to $14 in 2019.
Tweedy said service companies like his should treat employees with as much respect as customers, knowing that the best of them have ample job prospects elsewhere.
“There is no algorithm for cleaning the bathroom or the kitchen,” he said. “We have to push more. We have to train more. We have to engage more.”
For his 175 full-time employees, Twiddy has offered perks — from allowing flexible work-from-home schedules to taking employees on group trips to Nashville and Las Vegas.
His business is still thriving, thanks to Americans’ pent-up demand for vacations. Despite his high costs, he said, “I make more money than I ever do.”
A labor shortage of more than two years has led some companies to turn to machines to try to improve efficiency. Wal-Mart, the nation’s largest retailer and private employer, for example, has embarked on a major push toward automation.
By fiscal 2026, the company says it expects nearly two-thirds of its stores to be serviced by automation, with the majority of items processed through its warehouse moving through automated facilities. The change will include automated forklifts that unload goods from trailers instead of having workers do manual labour. Walmart said such moves would require roles that require less physical labor but may offer higher salaries.
Despite healthy job growth last month, the latest economic indicators point to a slowdown in the economy, which should help ease inflation pressures. Manufacturing is weakening. America Trade with the rest of the world Decline. And while restaurants, retailers, and other service businesses continue to grow, They do it more slowly.
For Fed officials, taming inflation is the first job. The response was slow after 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.
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 benefit 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 Fed hoped employers would ease wage pressures by advertising fewer job vacancies rather than cutting many existing jobs.
The March numbers are the last jobs report the Fed will see before its next meeting on May 2-3. But its policymakers will get a clearer view of inflationary pressures next week, when the Labor Department releases price reports at the consumer and wholesale levels.
Some economists hope that the economy will be able to avoid a recession despite the ever-high borrowing rates that the Federal Reserve is designing.
“Today’s job market doesn’t look like it’s about to slide into recession,” Zhao said. “I wouldn’t bet on the job market.”