The momentum in the U.S. labor market flagged in March, new government data showed Friday, with the private sector and the government adding only 98,000 jobs, the lowest gain in nearly a year, as winter storms weighed on economic activity.
“It was a disappointment,” said Beth Ann Bovino, chief economist at S&P Global Ratings. But the lower job gains in the month were probably caused by such temporary factors as the weather, she said. “Also it comes after strong job gains the prior few months, and maybe businesses are taking a break.”
Other data released Friday morning showed a stronger picture of the labor market, suggesting the rough month for job growth may be more of a passing fluctuation than a sign of a deeper economic malaise.
The unemployment rate fell to 4.5 percent from 4.7 percent in February, while the broadest measure of unemployment — which counts “discouraged workers” who have given up looking for work, as well as those who are employed part time but would like to be full time — also fell sharply, to 8.9 percent.
Markets were slightly higher on the news Friday, with the Dow Jones industrial average and the Standard & Poor’s 500-stock index up 0.22 percent and 0.15 percent, respectively, in midafternoon.
Economists had widely expected the official jobs data for March to come in below the surprisingly strong numbers seen in January and February, when unseasonably warm weather buoyed many industries. In what was the second-warmest February on record, the construction industry added more jobs than it had in a decade.
In March, however, a cold snap and winter storm returned to dog the East Coast and Midwest, weighing on businesses and employment.
“I think it’s more of a blip than a start of a new trend,” said Scott Anderson, chief economist of Bank of the West. Winter storms could have subtracted as many as 60,000 jobs from March payrolls, especially in weather-sensitive industries like construction, retail, and leisure and hospitality, Anderson said.
The professional and business services industry did much of the hiring in March, adding 56,000 positions. The mining sector and health-care sectors also grew strongly, while the retail industry shed 30,000 jobs as department stores and other physical retail outlets across the country shut their doors because of tougher competition from online platforms.
The Labor Department also revised its estimates for job creation in January and February, with the combined total falling by 38,000. Still, the nation has added 178,000 new jobs on average over the past three months, far above what economists say is necessary to keep up with population growth.
Average hourly earnings rose at an annual pace of 2.7 percent in March, following a 2.8 percent increase in February. The employment population ratio for prime-age adults, a measure of how many working-age people are in the labor force, rose to 78.5 percent in the month, the highest level since September 2008.
Coming alongside a significant fall in unemployment claims in early April, these measures probably signal a tighter labor market, where many qualified people who want a job are able to find one, and companies have to work harder to find talent.
“Companies that are growing want to hire really good people, and when you have an unemployment rate under 5 percent, there’s a shortage of them,” said Tom Gimbel, chief executive of national staffing and recruiting firm LaSalle Network.
“It’s not just that the unemployment rate was down, it was down for the right reason, which is that more people were getting back to work,” said Jed Kolko, chief economist at jobs site Indeed.
Yet the strength of the economy still varies significantly by region, with the unemployment rate ranging from less than 3 percent in some states to more than 6 percent in others, Kolko said.
Job growth has been much stronger in some sectors, demographic groups and regions than in others in recent years because of longer-run trends in how automation and technology are affecting the economy, Kolko said. The unemployment rates for women, whites and Hispanics all ticked downward in March, but jobless rates remained unchanged for adult men at 4.3 percent and African Americans at 8 percent.
While economic data remains strong, some analysts caution that investors may already be losing patience with the White House’s ambitious economic promises, only 77 days into Donald Trump’s presidency.
U.S. stock markets surged following the election on expectations that President Trump would deliver on bold promises to buoy American industry by slashing regulations and corporate taxes. But the White House has faced early obstacles when introducing its health-care and tax plans to Congress, and much of the news cycle has been dominated by hearings about connections with Russia and infighting in White House leadership.
Meanwhile, Trump’s ambitious campaign promises related to reforming America’s trade strategy and rebuilding its infrastructure mostly have yet to materialize.
“I do think we’re in for a little bit of correction in terms of sentiment,” Anderson said. “A lot of it was built on expectations for tax cuts and infrastructure spending, and right now, Washington appears to be distracted by other matters.”
In an interview Friday morning on Fox Business, White House National Economic Council Director Gary Cohn pointed to improvements in unemployment data. “When you look at the job report as a whole, I think there’s an awful lot of good news in here,” Cohn said. “We are seeing many Americans get back into the workforce and getting jobs created. Yes, we would have liked to have seen more jobs created. But, remember, this is just one month.”
He said the White House is pushing hard to craft a plan to overhaul the tax code and roll back regulations, which they think will have a “stimulative” effect on the economy. Trump is “pushing us all very hard to get that done as soon as we can,” Cohn said.
Trump cheered strong jobs data in recent months as evidence that his election was already lifting business and consumer sentiment. But he has also repeatedly questioned the validity of the official job statistics the government produces.
The growth in the economy has helped persuade the Federal Reserve to pull back on the accelerator by gradually raising interest rates from the ultralow levels of the Great Recession. The Fed lifted its main interest rate on March 15, only the third such move in more than eight years.
Economists said March’s lower job numbers alone were unlikely to dissuade the Federal Reserve from raising rates again, probably at their upcoming policy meetings in June or September. Following the jobs report Friday, investors saw a 63 percent chance of a rate hike in June.
Note: A previous version of this story contained inaccurate information about the most recent month in which jobs growth was as slow as March.
US hiring slumped in March as employers added only 98000 jobs – Washington Post