America’s employers added a solid 236,000 jobs in March, suggesting that the economy remains on solid footing despite the nine interest rate hikes the Federal Reserve has imposed over the past year in its drive to tame inflation.
The unemployment rate fell to 3.5%, just above the 53-year low of 3.4% set in January.
What happened
Some of the details of Friday’s report from the Labor Department raised the possibility that inflationary pressures might be easing and that the Fed might soon decide to pause its rate hikes. Average hourly wages in March were up 4.2% from 12 month earlier, down sharply from a 4.6% year-over-year increase in February. Measured month to month, though, wages rose 0.3% from February to March, a tick up from a mild 0.2% gain from January to February.
In another sign that might reassure the Fed’s inflation fighters, a substantial 480,000 Americans began looking for work in March. Typically, the bigger the supply of job seekers, the less pressure employers feel to raise wages. The result is often an easing of inflation pressures.
In its report Friday, the government also revised down its estimate of job growth in January and February by a combined 17,000.
What it means
“The labor market continues to soften,’’ said Sinem Buber, economist at the job firm ZipRecruiter. “”That should reduce inflationary pressures in the coming months and give the Federal Reserve greater confidence regarding the inflation outlook.’’
Among the sectors of the economy that gained jobs in March were restaurants and bars, healthcare providers and government agencies.
Why it matters
Despite last month’s healthy job growth, the latest economic signs suggest that the economy may be slowing, which would help cool inflation pressures. Manufacturing is weakening. America’s trade with the rest of the world is declining. And though restaurants, retailers and other services companies are still growing, they are doing so more slowly.
What’s next
The Fed is aiming to achieve a so-called soft landing — slowing growth just enough to tame inflation without causing the world’s biggest economy to tumble into recession. Most economists doubt it will work; they expect a recession later this year.
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