(Reuters) – The black unemployment rate hit a record low in March, a landmark for a U.S. labor market that most policymakers and economists expect to begin its downturn in the face of rising interest rates, threatening those historic gains.
The Black unemployment rate fell to 5% last month from 5.7% in February, the Bureau of Labor Statistics said on Friday, perhaps the most striking data in a report that at once showed the resilience of the US labor market but also early signs of its vulnerability to higher borrowing costs engineered by the Federal Reserve over the course of the year. last year.
Just a month ago, Fed Chairman Jerome Powell faced scathing criticism from a group of progressive Democratic lawmakers who accused him of trying to orchestrate an hiring slowdown that would put historically vulnerable populations — blacks in particular — at risk of job losses.
March data shows that this has not happened yet. The 0.7 percentage point decline in the unemployment rate among African Americans was the largest since November 2024 and was led by Black women, whose unemployment rate fell to a record low of 4.2%. The rate for black men rose to 5.2% from matching February’s record low of 5.1%.
Moreover, the gap between the unemployment rates for whites and African Americans has narrowed to 1.8 percentage points, the lowest level since the Labor Department began tracking it a half-century ago.
However, with the overall unemployment rate in the United States at its lowest level since the 1960s, this may be as good as it gets. The question is whether these lower rates and differentials will hold relatively steady as the labor market declines in the coming months, as most people expect, or whether the gains of Blacks, Hispanics, and others are eroding more quickly as they have historically done during economic downturns.
Warning signs
Indicators of late cycle behavior are starting to pile up. Net inflows into the labor market and labor force participation rate are both improving, and developments research shows are coming late in the employment cycle.
Employment in sectors most sensitive to cracking in the face of higher interest rates is starting to flash yellow.
For example, employment in construction, which has been surprisingly resilient given the decline in housing that has begun since the Federal Reserve began raising rates a little over a year ago, fell in March. The manufacturing sector also lost jobs in the wake of slumping industrial production, one of the closely watched stats of the onset of the recession.
The bulk of job growth is now coming from areas that have proven very troublesome for the Fed as a source of inflation, perhaps a sign that the central bank may feel compelled to tighten conditions further to slow the pace of price increases. Case in point: Not only did leisure and hospitality sector job gains drive overall private sector employment growth, but the monthly wage increase across the sector, at 0.7%, was more than double the national average.
Data like this again highlights the potential weakness in March’s gains for black workers. In every American recession since the 1970s, the black unemployment rate has increased by at least two percentage points compared to whites, and often by much more.
(Reporting by Dan Burns and Howard Schneider). Editing by Paul Simao
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