US job growth slows in March

Payroll figures weakest since May but this may reflect things are returning to normal

WASHINGTON • US payroll gains slowed in March while the jobless rate unexpectedly dropped to the lowest in almost a decade, suggesting the labour market is returning to a more sustainable pace of progress.

The 98,000 increase followed a 219,000 rise in February that was less than previously estimated, a Labour Department report showed. The median forecast in a Bloomberg survey of economists projected a 180,000 advance.

The unemployment rate fell to 4.5 per cent from 4.7 per cent, and wage gains slowed to a 2.7 per cent year-on-year pace.

While the payroll figures are the weakest since last May and represent a pullback from the first two months of the year, it may reflect that things are getting back to normal. Employment has been on a healthy run, giving Federal Reserve policymakers enough confidence to raise interest rates last month and forecast two more hikes this year.

Businesses have been challenged by a dwindling pool of the unemployed, and are gradually giving in to pressures to raise wages in order to attract and retain talent.

"Even if payrolls are slowing down, I'm not sure that means the labour market is weakening," said Mr Stephen Stanley, chief economist at Amherst Pierpont Securities. "To the extent that it is slowing down or going to slow down, it's probably more a function of tight supply than weakening demand."

The March payroll gains compare with last year's average of 187,000 a month, a pace that analysts had forecast to decline to 181,000 this year. Revisions to the previous two months' data subtracted a total of 38,000 jobs from payrolls, making for an average first-quarter rise of 178,000 a month.

President Donald Trump has set a goal of adding 25 million jobs over 10 years, which would require additions of 208,000 a month, or 2.5 million positions a year.

Hiring tends to show large swings around weather disturbances, and the March report had two such issues to contend with: a storm during the payrolls survey week that dumped 25cm to 50cm of rain over a large swathe of the north-east, and more-seasonal temperatures after an unusually warm February.

However, tepid consumer spending in the first quarter has offered other evidence of slowing demand.

Personal spending barely advanced in February and demand for automobiles slowed in March. A second-quarter rebound could depend on strengthening in the labour market.

The wage figures continue to indicate steady gains without a rapid pickup. Average hourly earnings rose 0.2 per cent from the previous month, compared with 0.3 per cent in February, which was up 2.8 per cent from a year earlier. The average work week was unchanged at 34.3 hours in March.

The unemployment rate represented the lowest level since May 2007. Analysts had estimated it would be unchanged at 4.7 per cent.

March payroll estimates from economists surveyed by Bloomberg ranged from gains of 100,000 to 267,000. February's was initially reported as a 235,000 increase.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on April 08, 2017, with the headline 'US job growth slows in March'. Print Edition | Subscribe