US employers added just 236,000 jobs in March, coming in below expectations and indicating that the labor market is cooling off amid the Federal Reserve’s yearlong rate-hiking campaign to chill inflation.
The unemployment rate dropped to 3.5%, according to the March jobs report released Friday by the Bureau of Labor Statistics.
Economists were expecting a net gain of 239,000 jobs for the month and a jobless rate of 3.6%, according to Refinitiv. This is the first jobs report in 12 months that came in below expectations.
While the US labor market has kept trucking along despite other areas of the economy slowing under the weight of interest rate hikes, it is showing some signs of cooling.
“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,” said Daniel Zhao, Glassdoor’s lead economist, in a statement. “The labor market is still strong, but it’s gliding slowly back down to Earth.”
Over the past 12 months, the labor market has seen a net gain of more than 4.1 million jobs, averaging 345,417 jobs gained, per month, helping drop the unemployment rate to decades-low levels.
March’s total is a notable reduction from February’s upwardly revised 326,000 jobs gained and January’s monster jobs number — originally 517,000 but subsequently revised down to 472,000.
The 236,000 jobs added during March is the smallest monthly gain since a decline in December 2020. Excluding the losses seen during the first year of the pandemic, it’s the smallest monthly jobs gain since December 2019.
However, the job market remains above pre-pandemic norms: Between 2010 and 2019, the economy added an average of 183,000 jobs a month.
President Joe Biden called the March employment report a “a good jobs report for hard-working Americans,” in a statement released Friday morning.
Industries such as leisure and hospitality, health care and government continued to lead the way in job gains. Industries reporting monthly losses included retail trade, temporary help, manufacturing, construction and information services.
“Industries that were facing acute labor shortages, particularly hospitality, are really making gains in getting the workforces back that they needed to,” Jim McCoy, senior vice president at ManpowerGroup, told CNN. “We saw some moderation in a few other sectors like government, like health care and then pretty much stability across most of the rest 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.”
Employment in leisure and hospitality still has yet to recover to pre-pandemic levels. Through March, the industry was about 368,000 jobs, or nearly 2.2%, shy of February 2020 employment levels, an analysis of BLS data shows.
More cooling ahead
Labor market data released earlier in the week teed up a more moderate jobs report.
Job openings fell to 9.93 million (the first sub-10 million total in nearly 10 years); ADP’s private-sector job gains came in at 145,000 for March, landing below expectations of 200,000; the Challenger Report showed job cuts on the rise with 89,703 layoffs announced in March, a 15% gain from February; and continuing jobless claims hit 1.823 million, a level not seen since December 2021.
For many months, weekly jobless claims data continued to paint a picture of an incredibly tight labor market that showed little impact from the building waves of mass layoff announcements from firms in technology and beyond.
However, Thursday’s release from the Department of Labor included a series of significant revisions and seasonal adjustments to better reflect the labor market dynamics since the pandemic.
The newly revised data shows a “clear upward trajectory” in initial claims since the beginning of February, with the four-week moving average rising to 240,000 claims from 200,000, noted Dante DeAntonio, director of Moody’s Analytics.