Nonfarm payrolls rose roughly in line with expectations in March as the labor market showed increased signs of slowing.
The Labor Department reported Friday that payrolls rose 236,000 for the month, up from the Dow Jones estimate of 238,000 and below the upward-revised 326,000 in February.
Unemployment rate fell to 3.5%, when it was expected to remain at 3.6%, the decline coming as labor force participation hit its highest level since before the Covid pandemic.
Although close to what economists had expected, the total was the weakest monthly gain since December 2020 and comes amid efforts by the Federal Reserve to slow labor demand to calm the labor market. ‘inflation.
Along with payroll increases, average hourly earnings rose 0.3%, bringing the 12-month increase to 4.2%, the lowest level since June 2021. The average workweek fell slightly at 34.4 hours.
Leisure and hospitality led the sectors with job growth of 72,000, below the pace of 95,000 over the past six months. Public administration (47,000), professional and business services (39,000) and health care (34,000) also posted solid increases. Retail trade lost 15,000 jobs.
The report comes amid a slew of signs that job creation is in decline.
In separate reports this week, companies said layoffs rose in March, up nearly 400% from a year ago, while jobless claims were high and mass growth Private pay also seemed to be slowing down. The Labor Department had also reported that job postings fell below 10 million in February for the first time in nearly two years.
This all follows a year-long campaign by the Fed to ease what had been a historically tight labor market. The central bank raised its benchmark borrowing rate by 4.75 percentage points, the fastest tightening cycle since the early 1980s and an effort to reduce runaway inflation.
Several Fed officials said this week that they remain committed to the fight against inflation and see interest rates remaining high at least in the short term. Markets, however, remain skeptical. Current prices indicate a slight tilt towards the likelihood of a final rate hike in May, but with cuts totaling about a full percentage point by the end of 2023.
Investors fear that the Fed’s decision will lead to at least a shallow recession, something the bond market has been indicating since mid-2022.
In its most recent calculation, through the end of March, the New York Fed said the spread between 3-month and 10-year Treasuries indicated a recession probability of about 58% over the next 12 months. The Atlanta Fed’s GDP tracker points to growth of just 1.5% in the first quarter, after indicating a 3.5% gain just two weeks ago.
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