- The US economy added 431,000 jobs in March, missing the forecast for 490,000 new payrolls.
- The unemployment rate dipped to 3.6% from 3.8%, beating the 3.7% estimate.
- The new data shows the jobs recovery losing a bit of steam as the Russia-Ukraine war boosted inflation.
The US's fight against inflation entered a new stage in March, and it seems to have slightly slowed the labor market's recovery.
The economy created 431,000 nonfarm payrolls last month, the Bureau of Labor Statistics announced Friday morning. That fell short of the median forecast for 490,000 new jobs from economists polled by Bloomberg. The gain is the smallest since September and reflects weaker job growth than the prior month's pace.
February's gain was revised to 750,000 from 678,000 new payrolls. The final revision to January's payroll gain brought the sum to 504,000 from 467,000. The US has now recovered 93% of the jobs it lost at the start of the pandemic.
The unemployment rate slid to 3.6% from 3.8%, according to the report. Economists expected the rate to drop to 3.7%. Although the rate now sits just a hair above its record pre-crisis low of 3.5%, millions of Americans still haven't rejoined the workforce. As more return, it's possible the rate climbs higher as the government counts more jobseekers as unemployed, rather than out of the labor force.
March saw the economic recovery run up against a new headwind in the form of the Russia-Ukraine conflict. The US joined Western allies in imposing harsh economic sanctions against Russia for its invasion, including a ban on Russian oil and natural gas. The conflict and related sanctions drove prices for key commodities like crude oil, wheat, and fertilizer sharply higher through March, raising concerns that inflation will accelerate beyond its already historic pace.
It's unclear just how much the conflict will lift prices, and the preliminary March jobs numbers only cover a period that ended about halfway through the month. Those weeks also saw daily coronavirus infections slide to the lowest levels since the summer of 2021, signaling a more favorable hiring environment. Recent consumer spending data also showed Americans' shopping spree lasting through February, albeit at a slower pace of growth. Prices are soaring at the fastest pace in 40 years, but economic activity seems to be holding strong.
"The American economy is in a very difficult position now, with high risk factors accumulating, but today's jobs report shows a resilience of recovery, and a confidence in continuing to see healthy job growth," Daniel Zhao, senior economist at Glassdoor, said.
The labor force participation rate, which measures the share of the populaton working or looking for work, rose to 62.4% from 62.3%. The metric has taken on new importance in recent months as employers continue to struggle with the labor shortage.
The rate reveals just how much of the population is sitting on the labor force's sidelines. Although payroll totals and employment have staged swift recoveries through the pandemic, participation remains well below pre-crisis levels. An uptick in the rate would hint that the labor shortage is fading and employers will have an easier time finding workers.
The labor shortage has also given way to historically strong wage growth, but the streak of massive month-over-month gains has turned choppy. Average hourly earnings rose by $0.13, or 0.4%, to $31.73 through March, matching the average estimate. That follows a meager $0.01 increase in February and suggests the wage boom isn't quite on its last legs.
Who did the most hiring in March
The Friday report showed healthy job growth throughout the economy, though the largest gains were posted by the usual suspects. Leisure and hospitality firms added the most jobs through March, creating 112,000 nonfarm payrolls as the sector's rehiring effort charged forward. While such businesses have posted the largest increases through the recovery, employment in the sector is still down some 1.6 million payrolls from pre-pandemic levels.
Professional and business services followed with a 102,000-payroll gain, according to the report. Retailers and manufacturers added 49,000 and 38,000 jobs, respectively.
Employment edged slightly lower at transportation and warehousing firms as the sector shed 1,000 payrolls. Payroll counts were largely unchanged for the mining, wholesale trade, information, and government sectors.