(CN) — American employers added 236,000 jobs in March, the smallest gain so far this year, while the unemployment rate ticked down to 3.5%.
The latest jobs report released Friday morning by the Labor Department indicates the market might finally be slowing down in response to the Federal Reserve’s efforts to tame inflation.
Last month’s increase was in line with the Dow Jones estimate of 238,000. By comparison, a revised 472,000 jobs were added in January followed by 326,000 in February.
Nick Bunker, economic research director for North America at career site Indeed, said Friday’s report shows a still-strong labor market with historically low unemployment.
“The U.S. labor market has lost some speed, but all indications are that it’s slowing down not stalling,” he wrote. “And even if employment isn’t growing at the pace we saw last year, its speed is still rapid.”
The report comes two weeks after the Fed delivered its ninth straight interest rate hike in an attempt to cool down the economy in the face of surging inflation, which hit a four-decade high last year.
Andrew Hunter, deputy chief U.S. economist at Capital Economics, said the slower payroll growth last month combined with a drop in job openings, higher weekly unemployment claims and the fallout from banking instability all point to job gains slowing sharply soon.
“Overall, while the headline gain was a little stronger than we had expected, it was still the smallest monthly gain since December 2020,” Hunter noted.
He called the March jobs report “a mixed bag” as far as predicting whether the central bank will raise interest rates again when it meets next month.
“Whether or not the Fed squeezes in a final 25 [basis point] rate hike, we still think they will be cutting again later this year as the economy falls into recession,” he wrote.
The leisure and hospitality industry, which was hit hardest by Covid-19 lockdown orders, led the way in hiring last month with the addition of 72,000 positions, including 50,000 at food and drinking establishments. Despite averaging 95,000 new jobs a month for the last six months, the sector is still down 368,000 compared to its pre-pandemic level in February 2020.
There were 39,000 more jobs in professional and business services, followed by 34,000 in health care. Notable gains were also seen in social assistance (17,000) and transportation and warehousing (10,000).
The retail industry lost 15,000 jobs in March, while employment stayed mostly flat in fields like mining, construction and manufacturing.
In the public sector, an overall increase of 47,000 positions was driven by a gain of 26,000 in local government. State governments added 13,000 jobs last month, with 8,000 more at the federal level.
Bunker said the robust hiring pace of 2022 is over, but he noted the average of 345,000 new jobs a month so far this year is more than enough to keep up with population growth.
“Rather than an abrupt and jarring end to the jobs party of the past couple of years, the nation’s job market is instead gradually turning the lights back up and the music down in a smooth transition from weekend to weekday that looks, for now, to be largely sustainable and healthy,” he wrote. “While it’s unclear if the Federal Reserve will still play its traditional role and pull the punchbowl away, the party is already winding down—there’s no need to crash it.”
In a statement Friday morning, President Joe Biden said the jobs report shows the United States continues “to face economic challenges from a position of strength.”
“But there is more work to do,” the president said, adding that his administration is “building an economy that benefits hard-working Americans in every community across the country, not just those at the top.”
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