U.S. employers brought 196,000 new employees on board in March as the labor market rebounded from a February lull.
The increase reported by the U.S. Labor Department on Friday was almost 10 times as much as the 20,000 added in February and topped even the 175,000 average estimate from economists. The unemployment rate, calculated separately, held steady at 3.8 percent and compares with a nearly 50-year low of 3.7 percent in November.
March’s gains leave average growth for the past three months at 180,000, well above the level needed to keep pace with inflation, which shows “the economy is still expanding and there are really no signs of a recession on the horizon,” Joseph Song, an economist with Bank of America, told the Washington Examiner.
That buoys President Trump, who has made bolstering the U.S. economy a priority, as the 2020 race draws closer and Democratic rivals criticize his immigration policies and protectionist trade moves.
The results may, however, undercut the administration’s push for more lenient monetary policy, either through an interest-rate reduction or resuming the purchase of government bonds to loosen up capital markets, a tactic employed during the financial crisis and known as quantitative easing.
Another month with growth as slow as February’s would have “added to the overall angst in the market” that slowing global growth was infecting the U.S., said Doug Clark, chief portfolio strategist at Prime Advisors. Instead, payroll growth was strong enough to keep the Fed “on hold,” he said, and doesn’t support either raising or lowering interest rates from the current range of 2.25 to 2.5 percent.
The central bank itself has said it will be “patient” with rate increases for now after four hikes last year prompted Trump to question whether he could fire Fed Chairman Jerome Powell, whom he had chosen to succeed Janet Yellen.
“One of the Fed’s biggest headaches right now is the political pressure the president is trying to apply,” Mark Hamrick, senior economic analyst for Bankrate.com, told the Washington Examiner, noting that White House assessments that the economy remains strong run counter to the idea that the central bank should reduce rates or re-accelerate quantitative easing.
Despite the overall growth, however, some industries lost workers in March. Retailers cut 11,700 jobs and manufacturers trimmed payrolls by 6,000, undermining a sector whose fortunes Trump has attempted to buoy with tariffs on steel and aluminum and proposed duties on cars and car parts.
“The economy is not necessarily firing on all cylinders,” Hamrick said. “We’ve seen some cuts in the auto sector, and that has weighed on the goods-producing and manufacturing realm.”
Still, factory workers received one piece of good news in March. General Motors, facing criticism from both Trump and his Democratic rivals over recent plant shutdowns, promised to invest an additional $1.8 billion in U.S. factories, one of which will build a vehicle originally slated for overseas production.
The spending, which includes a $300 million upgrade of an Orion, Mich., plant that will build a new electric vehicle under the company’s Chevrolet nameplate, will create 700 more jobs and support 28,000 current positions in six states. The new Chevy will join the electric Bolt, furthering the Detroit-based company’s commitment to a technology widely promoted as reducing carbon emissions.
