BIG JOBS MISS: A snowstorm that slammed into the Midwest and East Coast in mid-March probably curtailed job growth.
EMPLOYERS ADD DISAPPOINTING 98,000 POSITIONS IN MARCH
Harsh winter weather slowed U.S. hiring last month as employers added 98,000 jobs in a pullback that was sharper than expected.
Economists surveyed by Bloomberg had projected an increase of 180,000 jobs.
The U.S. unemployment rate, which is calculated from a different survey, fell from 4.7% to 4.5%, the lowest since May 2007.
Analysts had expected somewhat of a retreat in job growth after unseasonably mild winter temperatures pulled hiring forward to early in the year, especially in industries such as construction. That trend resulted in job gains of 200,000-plus in January and February.
A snowstorm that slammed into the Midwest and East Coast in mid-March probably curtailed job growth even more, said Jim O’Sullivan, an economist with High Frequency Economics. Before the Labor Department report was released Friday, Goldman Sachs estimated the weather could drag down payroll gains by 30,000 to 60,000.
Some economists said the outsize job gains early this year defied a low unemployment rate, which means businesses face a shrinking pool of available workers. Many analysts expect that trend will result in average monthly payroll gains of about 170,000 this year, down from 187,000 last year and 226,000 in 2015.
The feeble showing in March probably reflects the weather, a late Easter that could have pushed holiday hiring to April from March and a tight labor market, said Gus Faucher, an economist with PNC Financial Services Group.
“It is getting tougher for businesses to hire workers,” he said.
The construction industry added 6,000 jobs last month, while retailers were especially hard-hit by the weather, as well as store closures by chains such as Sears and Macy’s. Leisure and hospitality added 9,000 jobs, and health care grew by 17,000. Professional and business services was unscathed by the weather, adding 56,000 jobs.
The Federal Reserve looks for steady employment gains to justify its plans for two more rate hikes this year. The Fed has raised its benchmark rate twice since December. Economist Paul Ashworth of Capital Economics wrote to clients that Friday’s weak report “isn’t going to stop the Fed from hiking interest rates again in June.”
In March, businesses added 89,000 jobs. Federal, state and local governments added 9,000.
Job gains for January and February were revised down by 38,000. January’s was revised to 216,000 from 235,000, and February’s to 219,000 from 238,000.
Average hourly wages rose 5 cents to $26.14, but annual gains slipped to 2.7% from 2.8% the prior month. Earnings generally have picked up the past year or so from the tepid 2% pace that prevailed for most of the recovery. The Fed looks for a further acceleration and faster inflation to bolster its rate hike plan. Employers are likely to lift wages to attract the smaller pool of workers.
Other reports signaled continued strong hiring in March. Payroll processor ADP estimated that businesses added a booming 298,000 jobs. An index of hiring in manufacturing climbed to its highest level in nearly six years.
A measure of hiring in the service sector, which makes up about 80% of the economy, fell sharply.