US Labor Market Remains Strong Despite Signs of Cooling
The US economy added 236,000 jobs in March, according to data from the Bureau of Labor Statistics, beating market consensus calls looking for an unchanged reading of 3.6% in March.[0] The figure represents a strong boost to the labour market and a dip from previous months but still shows a robust labour market.[1] The unemployment rate also declined slightly to 3.5%, with the rate of unemployment for African Americans falling to 5% — the lowest level since the government began tracking the figure in 1972.[2] Leisure and hospitality led the job gains last month, with payrolls growing by 72,000, while retail shed 14,600 jobs.[3]
The US labour market has been showing some signs of cooling, with rising interest rates and slowing economic growth beginning to take their toll on hiring. The Federal Reserve has been raising interest rates aggressively in an effort to curb inflation, with the Fed particularly concerned about the rising price of services, which is largely driven by rising wages. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labour market.
Although the labour market has been slowing, it is still strong. “We are seeing clear slowing from the absolutely mind-boggling fast job growth that we had been seeing a year ago,” says Heidi Shierholz, Senior Economist and Director of Policy at the Economic Policy Institute.[1] “But it is still very strong. It is cooling but strong.”[1]
In February, the number of job openings posted by employers was 9.9 million, which is the lowest it has been since May 2021. This suggests that there is currently less demand for workers.[4] However, the labour market remains resilient, with the Federal Reserve looking for balance from it.[5]
After the release on Friday, the CME Group's data shows that markets are currently estimating a 67% probability of the Federal Reserve increasing rates by 0.25% in May, which is higher than the previous 50/50 chance of a hike on Thursday before the announcement.[3]
0. “Job growth totals 236,000 in March, near expectations as hiring pace slows” NBC News, 7 Apr. 2023, https://www.nbcnews.com/business/business-news/job-growth-totals-236000-march-expectations-hiring-slows-rcna78656
1. “What the jobs report means for the economy, recession, and you” Vox.com, 7 Apr. 2023, https://www.vox.com/2023/4/7/23674305/jobs-report-labor-market-economy-recession
2. “The job market is cooling as higher interest rates and a slowing economy take a toll” NPR, 7 Apr. 2023, https://www.npr.org/2023/04/07/1168406439/the-job-market-is-cooling-as-higher-interest-rates-and-a-slowing-economy-take-a-
3. “Jobs report: US economy adds 236,000 jobs in March, unemployment rate falls to 3.5%” Yahoo Finance, 7 Apr. 2023, https://finance.yahoo.com/march-jobs-report-april-7-2023-123139159.html
4. “Jobs report shows 236,000 jobs added in March as hiring slowed” USA TODAY, 7 Apr. 2023, https://www.usatoday.com/story/money/2023/04/07/xx-jobs-added-march-hiring/11616246002/
5. “A labor market cooldown: US economy added just 236,000 jobs in March” CNN, 7 Apr. 2023, https://www.cnn.com/2023/04/07/economy/march-jobs-report-final/index.html
