U.S. hiring slows in March, but job market still looks healthy

Unemployment rate remains at 17-year low

WASHINGTON — U.S. employers added a modest 103,000 jobs in March after several months of robust gains, though the government’s overall jobs report Friday suggested that the labor market remains fundamentally healthy.

The unemployment rate remained at 4.1 percent, a 17-year low, for a sixth straight month, the government said. Average hourly pay ticked up, climbing 2.7 percent compared with a year earlier.

The government also revised down its estimate of job growth for January and February by a combined 50,000. Still, over the past six months, employers have added a healthy average of 211,000 jobs, evidence that hiring in the United States remains strong and the economy on solid footing in its ninth year of recovery from the Great Recession.

The pullback in hiring last month was likely payback for an explosive gain in February, economists said. Employers added 326,000 jobs that month — the largest monthly haul in two years.

“Overall, looking through the volatility, employment growth is trending higher and wage growth is starting to heat up,” said Paul Ashworth, an economist at Capital Economics.

March’s tepid job gain may make it slightly more likely that the Federal Reserve will raise short-term interest rates just twice more this year, rather than three more times. Last month, the Fed modestly raised its benchmark rate to a still-low range of 1.5

JOBS

squeeze apple growers in Washington, soybean farmers in Indiana and winemakers in California. And on Friday, Beijing warned that it will “counterattack with great strength” if the United States ups the ante.

Willing to negotiate

“We’re absolutely willing to negotiate,” Treasury Secretary Steven Mnuchin said Friday on CNBC, adding, “I’m cautiously optimistic that we’ll be able to work this out.”

At the same time, Mnuchin warned, “there is the potential of a trade war.”

Economists are already calculating the potential damage if talks collapse and give way to the biggest trade dispute since World War II.

The dueling tariffs could shave 0.3 percentage points off both U.S. and Chinese annual economic growth, according to estimates by Gregory Daco, head of U.S. economics for the research firm Oxford Economics.

In the United States, Mark Zandi, chief economist of Moody’s Analytics, said the dispute could wipe out half the economic benefits of the tax cut Trump signed into law with great fanfare in December.

“There’s lots of different channels through which this hurts the economy,” Zandi said. “The most obvious is it raises import prices. If American consumers have to spend more on Chinese imports, they have less to spend on everything else.”

In the first $50 billion in planned tariffs, the Trump administration was careful to limit the impact on American consumers, sticking mostly to industrial products such as robots and engine parts.

But if the administration tries to triple the tariffs, they will be more likely to hit the low-price Chinese products that American households have come to rely on, namely electronics, toys and clothing.

The administration appears to be betting that China will back down because it has more to lose. It sent $375 billion in goods to the U.S. last year, while the United States sent only $130 billion worth of products to China.

But China has other ways to retaliate. It could cancel aircraft orders from Boeing. It could meddle with U.S. supply chains by disrupting shipments from Chinese factories to U.S. companies. Or it could raise U.S. interest rates by selling Treasury bonds or buying fewer of them.

Withstanding the pain

The Chinese appear confident they can withstand more pain than Americans can. In a democracy like the U.S., “if people start to hurt, they’re going to complain,” said Sheets, who was undersecretary for international affairs in the Obama administration Treasury Department.

They’re complaining already.

Zippy Duvall, president of the American Farm Bureau Federation lobbying group, warned that the dispute has “placed farmers and ranchers in a precarious position.”

“We have bills to pay and debts we must settle and cannot afford to lose any market, much less one as important as China,” Duvall said.

Last year, the United States sold $12.4 billion in soybeans to China, nearly 60 percent of all U.S. soybean exports.

Trump has directed Agriculture Secretary Sonny Perdue “to implement a plan to protect our farmers and agricultural interests.”

But a move to support American farmers could widen the dispute.

“Farmers in countries like Australia, Brazil, Argentina, Canada and Europe would now find it difficult to compete with newly subsidized U.S. agriculture,” said Chad Bown, senior fellow at the Peterson Institute for International Economics. “As a result, they might demand retaliation against U.S. exports or subsidies of their own.”