US Adds 196,000 Jobs in March, a Return to Solid Growth

Friday, April 05, 2019

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After a lackluster performance in February, the job market bounced back in March. February’s number of new jobs was also revised upward, to 33,000 from 20,000.

The buoyant jobs market that has helped sustain American households for the better part of a decade did not go anywhere.

After an unexpectedly weak February — just 20,000 new jobs were initially reported — concerns arose that the remarkable wave of hiring might be ebbing. But employment surged again last month, beating the expectations of most economists with 196,000 new jobs, the Labor Department said.

Even lowly February looked better: The department revised its report upward to 33,000 jobs. And unemployment remained at 3.8 percent in March, while wage growth kept its momentum, ensuring that pay is growing faster than inflation.

 “We think the labor market is the strongest thing in the U.S. economy right now,” said Luke Tilley, chief economist at Wilmington Trust. “We’re encouraged by the wage gains.”

The economy has now produced more than 21 million new jobs since the labor market bottomed out in 2010, and the unemployment rate has plunged from a peak of 10 percent in October 2009.

But in recent months, economists have seen reasons to doubt the strength of the economy. The invigorating effects of the tax cuts enacted at the end of 2017 are expected to fade. Large overseas economies have slowed, in part a reaction to continuing trade tensions. And while the stock market has rallied since a rout at the end of last year, other important financial indicators — such as government bond yields — suggest that investors expect growth to moderate.

President Trump contends that the Federal Reserve slowed the economy last year by pushing interest rates too high, and has said he intends to nominate the conservative economist Stephen Moore and the former pizza chain executive Herman Cain to the central bank’s board.

“I personally think the Fed should drop rates,” Mr. Trump said.

Mr. Trump won’t necessarily get his way on interest rates. The Fed has already taken a softer stance: As recently as December, the central bank said it could raise rates in 2019, but it has since signaled that it probably wouldn’t do so.

Economists said the latest jobs report showed that the Fed’s willingness to hold interest rates at current levels was probably the right response for the economy.

“It doesn’t tell the Fed that it’s doing the wrong thing by remaining patient,” said Ellen Zentner, chief United States economist at Morgan Stanley.

The March jobs gain probably won’t be enough to dispel all the pessimism, though.

The report contained evidence of a slowdown in manufacturing, a sector that has performed well over the past two years. Manufacturers shed 6,000 jobs in March, driven mostly by the auto sector, and added just 1,000 in February. Last year, the sector on average added 22,000 jobs a month.

Some manufacturers have been hit by tariffs imposed by other countries in response to those put in place by Trump.

Rob Parmentier, chief executive of Marquis Yachts in Green Bay, Wis., said sales to some of the company’s biggest export markets had stalled as a result of the tariffs.

“There’s a chance we’d have to lay people off if we don’t get these tariffs fixed,” Parmentier said. “I understand what the president’s doing, but he’s got to do it faster, or get a better perspective on what he’s doing to American companies.”

While the March jobs number exceeded expectations — economists surveyed by FactSet predicted, on average, around 170,000 new jobs — job growth has slowed. In the first three months of the year, the economy added 180,000 jobs on average, down from a monthly average of 223,000 for all of 2018.

But some economists did not see slower hiring as a cause for concern.

“The number from last year was not sustainable,” said Martha Gimbel, research director at the job-search site Indeed. “What’s more surprising is that we’re still adding an average of 180,000 jobs at this point in a recovery.”

Hiring was strong in some sectors: Professional and business services, which cover a broad swath of white-collar positions, added 37,000 jobs in March. Health care services added 61,000, bringing the total over the past 12 months to about half a million new jobs.

But it was the wage growth revealed in the jobs report that provided perhaps the strongest reason for optimism.

For years, even as the economy added jobs and unemployment kept falling, wage increases were lackluster. But employees now appear to be getting solid raises. Hourly wages in March were 3.2 percent higher than a year earlier, slightly lower than the 3.4 percent growth in February but still roughly double the annual inflation rate. And some economists said the slight decline in growth was no cause for concern.

 “It’s a volatile number; it tends to bounce up and down,” Gimbel said. “What’s more important is that we’ve had six straight months above 3 percent.”

Steady wage growth may be the catalyst that helps keep the economic expansion going: Higher wages encourage more spending, and companies that wish to meet that consumer demand have to hire more people.

Firms in the leisure and hospitality sector have particularly benefited from people having more money to spend: Those businesses added 33,000 jobs in March.

Sean Moloney, owner of My Bartender, a company in Portland, Ore., that provides bartenders and drinks at events, said he expected to hire 40 to 50 people during this year’s busy season, compared with around 15 people five years ago. And his customers are also spending more on the drinks served.

“People are willing to spend the extra money to get something other than the bargain brand,” he said.

Source: New York Times

Category: Economic Development