The economy created 103,000 new payroll jobs in March and the unemployment rate held steady at 4.1 percent, the Bureau of Labor Statistics reported Friday morning.
Job growth fell shy of forecasters’ expectations for about 175,000 new jobs.
The March slowdown in payroll growth, though, is likely attributable in part to winter weather, particularly in the northeast, slowing down commerce. Storms likely shaved around 60,000 payroll jobs from the month, according to figures from the Federal Reserve Bank of Chicago.
And even with March’s weaker-than-expected report, underlying job growth remains strong as the record-long labor market recovery stretches toward an eighth year.
Even with downward revisions of 50,000 to the past two months’ jobs numbers, monthly employment has grown by an average of 202,000 jobs over the past three months.
That is about twice the 90,000 to 120,000 new jobs the Federal Reserve reckons are needed each month to keep up with population growth.
“The underlying economic fundamentals and outlook for growth remain strong,” said Republican Kevin Brady of Texas, chairman of the House Ways and Means Committee.
In one bright spot from the report, hourly wage gains accelerated to a 2.7 percent annual rate.
And there are signs that the jobs market has now recovered to the point that it is enticing people in, rather than discouraging workers at the margins.
Most noticeably, the labor force participation rate has stayed roughly stable at around 63 percent for around four-and-a-half years now. That’s great news, considering that participation was expected to keep falling for years to come because of the retirement of the Baby Boom generation.
Furthermore, total underemployment fell to 8 percent, tied for the lowest since December of 2006, as measured by the “U6” unemployment rate that takes into account people who’ve been forced into part-time work or who are only sporadically searching for jobs.
Friday’s report is also good news because it suggests that the country has the capacity to create many more jobs. Simply put, an economy with strong job growth and modest wage gains is probably not one that is tapped out.
The Trump administration has set the goal of drawing many more people into the workforce via tax cuts, deregulation, and infrastructure spending, on the assumption that many people who don’t have jobs today would take work if they could find it. In other words, there are people considering retirement, caring for family, or additional school who could be tempted into jobs if they’re available and pay well.
In recent days, though, President Trump’s escalating threats with China over trade and palace intrigue about his administration have overshadowed some of the good news about commerce, preventing him and the GOP from profiting in the polls.
Meanwhile, the Federal Reserve signaled at its meeting last month that it was prepared to move more quickly to tighten monetary policy in response to faster economic growth.
From the vantage point of chairman Jerome Powell and other Fed officials, the economy is already past “full employment,” and soon the job gains will inevitably translate to higher inflation. To prevent prices from slipping out of the central bank’s grasp, they must slowly raise interest rates in response.
Indeed, there are signs that in some parts of the country, workers are getting harder to find. For instance, mobile home builders in Elkhart, Indiana, have taken to hiring county jail inmates to keep factories running as unemployment scrapes two percent there, the Wall Street Journal reported Thursday. Many states are at or near record-low unemployment.
Nevertheless, the strongest evidence that the national labor market as a whole could still heat up is that wage gains have stayed relatively muted up until now.
Federal Reserve Bank of Minneapolis president Neel Kashkari this week brushed off talk of a “labor shortage,” comparing businesses’ struggles finding workers to consumers failing to buy pistachios at $3 when the market price is higher.
One sector that has been finding workers and hiring them is manufacturing. Manufacturers added 22,000 jobs in March, making it a total of 232,000 net new jobs over the past year. Manufacturing had been hurt in previous years by a run-up in the dollar that made U.S. goods more expensive to foreign buyers.
The construction industry shed 15,000 jobs in March, a possible reflection of weather trends. Other sectors, however, either didn’t see much change or saw job growth in the month.
