Employers added a disappointing 103,000 jobs in March as colder weather appeared to crimp hiring after solid employment gains the first two months of the year.
The unemployment rate, which is calculated from a different survey, was unchanged at 4.1%, the Labor Department said Friday.
Economists expected 185,000 new jobs, according to a Bloomberg survey. In February, unseasonably warm weather pulled forward hiring in industries such as construction and retail, leading to blockbuster job gains that topped 300,000. Some economists forecast a sharp offsetting slowdown to 150,000 or less in March.
As a result, the weak showing is being viewed as a blip rather than a sign of a weakening labor market.
“The labor market is in very good shape,” says Joel Naroff, head of Naroff Economic Advisors.
Wage growth edges up
Sharper pay increases have been the biggest missing link in an otherwise robust labor market. In March, average hourly earnings increased 8 cents to $26.82, pushing the annual gain to 2.7% from 2.6%. Economists, and workers, are seeking bigger pay hikes as the low unemployment rate forces employers to struggle to find qualified job candidates.
Yet a spike in annual wage growth to 2.9% in January triggered a steep market sell-off as investors feared it would drive up inflation and prompt the Federal Reserve to raise interest rates faster. A slowdown the following month eased those concerns.
The March advance represents a middle ground that marks a steady increase without raising alarm bells among Federal Reserve policymakers.
Industries that led the way
Hiring slowed across most sectors. Health care led the gains, adding 34,000 jobs. Professional and business services added 33,000 and manufacturing, 22,000. But in a sign that weather played a big role, construction lost 15,000 jobs, retail lost 4,400, and leisure and hospitality, which includes restaurants and bars, added just 5,000.
There were some positives in the report. The unemployment rate was unchanged at a 17-year low of 4.1% for a sixth consecutive month. But a broader measure of joblessness that also includes part-time workers who prefer full-time jobs and discouraged workers who have stopped looking fell to 8% from 8.2%. The ranks of those “involuntary” part-time workers shrank by 141,000.
Also, the unemployment rate for Americans without a high school diploma fell sharply, to 5.5% from 5.7%. Unemployment for high school graduates dipped to 4.3% from 4.4%. The tight labor market appears to be especially benefiting people with less education who are being hired in greater numbers as low unemployment shrinks the pool of available job candidates.
What it all means
At first glance, the report was a downer. Not only were job gains disappointing in March, but total additions for January and February were revised down by 50,000.
Yet weather was the main reason for March’s poor performance. And payroll gains for the first three months of the year still averaged a very healthy 202,000, up from 182,000 last year. It takes only 80,000 new jobs a month to keep the unemployment rate from rising, and significantly higher totals will almost certainly keep pushing it down.
With the low 4.1% unemployment rate making it tougher for employers to hire and retain workers, CVS hires hundreds of disabled people annually and has ramped up the hiring amid the tight labor market, with the number of recruits doubling in 2017.