Labor market — In March, US employers added 236,000 jobs, which came below expectations.
It also suggests that the labor market is cooling off following as the Federal Reserve’s yearlong rate hikes attempt to curb inflation.
The Bureau of Labor Statistics released the March jobs report on Friday, showing the unemployment rate
The report
According to Refinitiv, economists expected a net gain of 239,000 jobs for the month and a jobless rate of 3.6%.
It is the first jobs report in 12 months that fell below expectations.
As the US labor market continued along despite other areas of the economy slowing from the interest rate hikes, it is also showing signs of slowdown.
Glassdoor lead economist Daniel Zhao released a statement saying:
“The labor market in March came in like a lion with a banking crisis and more layoffs, and is going out like a lamb with a solid jobs report.”
“The labor market is still strong, but it’s gliding slowly back down to earth.”
In the last 12 months, the labor market saw a net gain of more than 4.1 million jobs, with an average of 345,417 jobs gained monthly, which helped drop unemployment rates to decades-low levels.
The March total is a notable reduction from February’s revised 326,000 jobs gain and January’s massive jobs number, originally 517,000 but revised down to 472,000.
The 236,000 jobs added over March is the smallest monthly gain since the December 2020 decline.
Apart from losses seen in the first year of the pandemic, it is also the smallest monthly jobs gain since December 2019.
However, the job market remains higher than pre-pandemic norms.
Between 2010 and 2019, the economy added over 183,000 jobs monthly.
On Friday morning, President Joe Biden released a statement calling the March jobs report a good one for hard-working Americans.
Job gains
Several industries like government, health care, leisure and hospitality led the way in job gains.
Meanwhile, other industries are reporting monthly losses, including:
- Retail trade
- Temporary help
- Manufacturing
- Construction
- Information services
“Industries that were facing acute labor shortages, particularly hospitality, are really making gains in getting the workforces back what they needed to,” said ManpowerGroup senior vice president Jim McCoy.
“We saw some moderation in a few other sectors like government, like health care and then pretty much stability across most of the sectors.”
“You have a few drops – retail dropped 15,000 – but in the grand scheme of things, I wouldn’t consider that an alarming drop at all; that’s just a normal wobble within a course of a month.”
Leisure and hospitality have yet to recover employment back to pre-pandemic levels.
Throughout March, the industry was over 368,000 jobs, nearly 2.2% shy of February 2020 employment levels.
Read also: CPI set to influence the Fed’s 2023 plans for inflation
Anticipated cooling
Labor market data released earlier teed up a moderate jobs report.
Job openings fell to 9.93 million, the first sub-10 million total in almost a decade.
ADP’s private-sector job gains came in at 145,000 for March, which fell below the expectation of 200,000.
The Challenger Report showed jobs cuts were increasing as 89,703 layoffs were announced in March, a 15% uptick from February.
Jobless claims hit 1.823 million, a level last seen in December 2021.
For months, weekly jobless claims data showed a tight labor market with little impact from the building waves of mass layoffs from tech and other industry firms.
However, the Department of Labor’s Thursday release included several significant revisions and seasonal adjustments to reflect the labor market dynamics after the pandemic.
The revised data showed an upward trajectory in claims since early February.
The four-week moving average rose to 240,000 from 200,000, said Moody’s Analytics director Dante DeAntonio.
“The new revised path [jobless] claims more closely aligns with an increase of job cut announcements in recent months and also with the slowdown in payroll growth,” said DeAntonio.
“[Unemployment insurance] claims data will continue to provide an early signal into whether the labor market is likely to cool further in the coming months.”
Some of the leading indications in the March jobs report moved in a direction that indicated further cooling.
The average workweek went from 34.5 hours to 34.4 hours, showing that employers could be cutting hours.
Temporary employment also fell, while the construction industry lost jobs for the first time since January 2022.
“I wouldn’t necessarily call it an alarm bell at the moment, but those are the sectors [and indicators] you’re going to want to watch very closely,” said McCoy.
Regardless, Amy Glaser of Adecco noted that the labor market continues to show resilience.
“In reality, it’s more of a rebalancing from the white-hot market post-pandemic,” said Glaser.
“We’ve heard a lot about layoffs, but there were still so many unfulfilled jobs in the tech sector that what we’re seeing is a lot of folks who have been displaced or lost their jobs in the last few months, are very quickly finding new opportunities.”
Image source: The Hill
