WASHINGTON (Reuters): US employment growth accelerated from a 17-month low in March as milder weather boosted activity in sectors like construction, which could further allay fears of a sharp slowdown in economic growth in the first quarter.
Worsening worker shortages and lingering effects of tighter financial market conditions at the turn of the year, however, left job gains below 2018’s brisk pace. The Labor Department’s closely watched monthly employment report on Friday also showed a mild upward revision to February’s meager job gains.
Wage gains also slowed in March and more people dropped out of the labor force, leaving the report broadly supportive of the Federal Reserve’s decision last month to suspend its three-year campaign to tighten monetary policy. The U.S. central bank dropped projections for any interest rate hikes this year after increasing borrowing costs four times in 2018.
Nonfarm payrolls rose by 196,000 jobs last month. Data for February was revised modestly up to show payrolls rising by 33,000 jobs instead of the previously reported 20,000. February job gains were the smallest since September 2017. Economists polled by Reuters had forecast payrolls increasing by 180,000 jobs last month.
The economy has shifted into lower gear as stimulus from the Trump administration’s $1.5 trillion tax cut package as well as increased government spending fades. A trade war between Washington and Beijing, and slowing global growth have also taken a toll on the economy, which in July will celebrate 10 years of expansion, the longest on record. The employment report added to fairly upbeat construction spending and factory data that led Wall Street banks to boost their growth estimates for the first quarter.
Growth forecasts for the first quarter are between a 1.4 percent and 2.1% annualized rate. The economy grew at a 2.2% rate in the fourth quarter, stepping down from the July-September quarter’s brisk 3.4% pace. Average hourly earnings increased by four cents, or 0.1 percent in March after jumping 0.4 percent in February. That lowered the annual increase in wages to 3.2% from 3.4 percent in February, which was the biggest gain since April 2009. Modest wage growth could raise concerns about consumer spending after consumption stalled in January.
The unemployment rate was unchanged at 3.8 percent in March, close to the 3.7 percent that Fed officials project it will be by the end of the year. Though job gains have moderated from an average of about 223,000 in 2018, they remain above the roughly 100,000 per month needed to keep up with growth in the working-age population.
There are roughly 7.58 million open jobs in the economy. The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell to 63.0 percent in March from 63.2 percent in February, which was the highest in more than five years.
Economists expect job growth to average about 150,000 this year. Employment at construction sites rebounded by 16,000 jobs in March after falling by 25,000 in February. Leisure and hospitality sector payrolls accelerated by 33,000 jobs last month after slipping 1,000 in February.
The manufacturing sector lost 6,000 jobs in March. That was the first decline in factory payrolls since July 2017. Motor vehicle manufacturers have announced thousands of job cuts to deal with slowing sales that have led to an inventory bloat.
