American hiring rebounded last month after an unusually weak job market in February, but signs still point to a gradual economic slowdown.
The US economy added 196,000 jobs in March, up from 33,000 the prior month. Despite a slight upward revision from the original estimate, February hiring remained the weakest since September 2017.
Meanwhile, the unemployment rate remained at 3.8%, a level near historic lows.
While March hiring was robust, it brings the first-quarter average to 180,000 jobs created per month, down from 223,000 per month on average in 2018. Economists have been expecting a slowdown, and so far it looks gradual enough to support the idea that the economy may glide to a lower level of activity in 2019 rather than shudder to a halt.
“Markets are looking at every shadow and around every corner, whether it’s an inverted yield curve or bad jobs report,” said Sean Snaith, director of the University of Central Florida’s Institute for Economic Forecasting. “This should assure people that the boogeyman isn’t hiding in the closet.”
Another anemic month of job growth may have prompted the Federal Reserve to consider an interest rate cut later this year, after years of trying to raise rates back to a “neutral” level; this report is unlikely to push them in that direction.
Also reassuringly, the unemployment rate for African Americans dropped back to 6.7%, after rising to 7% from its lowest point ever back in May 2018.
The report did have one disappointing number, though: Wages, which economists had expected to grow at 3.4% over the year, and instead came in at 3.2%. Sustained periods of low unemployment are supposed to fuel fatter paychecks as employers struggle to fill positions, but this average hourly earnings number suggests the tight labor market isn’t accelerating that effect.
“Overall, nothing here to shift the dial very far in either direction. But the gradual slowdown in trend employment growth is another sign that the economy is weakening,” Capital Economics Chief US Economist Paul Ashworth wrote in a note to clients.
Also, manufacturing hiring slowed again after having been on a tear for the last year and a half. The sector lost 6,000 jobs in March, concentrated largely in the auto and auto parts sector — after adding only 1,000 in February, and both hourly and weekly earnings dropped slightly. Global manufacturing weakness and mounting tariffs have started to take a toll on the industry, and the shuttering of a General Motors plant in Lordstown, Ohio certainly didn’t help.
Retail, which abruptly stopped growing in January 2017 and then trended sideways, dropped another 12,000 jobs in March.
According to the household survey, which comes from a smaller sample, the unemployment rate only remained steady because the labor force shrank slightly more than the number of jobs. If that trend continues, it may show that those who remain on the sidelines of the labor market have structural barriers to joining it, such as care responsibilities or transportation challenges.
And in yet another sign that hiring is cooling off, the median number of weeks that people remain unemployed, at 9.6 weeks, has been ticking up in recent months, suggesting that people aren’t finding jobs as quickly as they used to after a layoff.
A measure that never recovered to its pre-recession high, the share of prime-age people who are working, also moved in the wrong direction in March, declining slightly to 79.8%.
