U.S. employers added 236,000 jobs in March, the Bureau of Labor Statistics said Friday, a sign of continued strength in the labor market despite interest rate hikes by the Federal Reserve to try and tame inflation.
The unemployment rate fell to 3.5%, slightly above the half-century low of 3.4% reached in January.
Friday’s government report suggested that the economy and the job market remain on solid footing despite nine rate hikes imposed over the past year by the Fed. The March job gain may lead the Fed to conclude that the pace of hiring is still putting upward pressure on wages and inflation and that further rates hikes are necessary. When the central bank tightens credit, it typically leads to higher rates on mortgages, auto loans, credit card borrowing and many business loans.
President Joe Biden hailed the news Friday as "a good jobs report for hard-working Americans."
"My economic agenda has powered an historic economic recovery," the president said in a statement. "We’ve created 12.6 million jobs since I took office. The unemployment rate is close to the lowest it has been in more than 50 years and a record low for African Americans. Thanks to the policies we have put in place, the recovery is creating good jobs that you can raise a family on, which is pulling more Americans into the labor force. In fact, the share of working age Americans in the labor force is at a 15 year high."
Despite last month’s brisk job growth – employers added 326,000 jobs in February – the latest economic signs increasingly suggest that an economic slowdown may be upon us. Manufacturing is weakening. America’s trade with the rest of the world is declining. And though restaurants, retailers and other services companies are still growing, they are doing so more slowly.
Stemming inflation is the top priority of the Federal Reserve. The central bank was slow to respond after consumer prices started surging in the spring of 2021, concluding that it was only a temporary consequence of supply bottlenecks caused by the economy’s surprisingly explosive rebound from the pandemic recession.
Only in March 2022 did the Fed begin raising its benchmark rate from near zero. In the past year, though, it has raised rates more aggressively than it had since the 1980s to attack the worst inflation bout since then.
And as borrowing costs have risen, inflation has steadily eased. The latest year-over-year consumer inflation rate — 6% — is well below the 9.1% rate it reached last June. But it’s still considerably above the Fed’s 2% target.
"There is more work to do," Biden acknowledged. "My Administration is working each day to lower costs for families and to make our economy even stronger, now and for the long term, with investments in infrastructure, innovation, and clean energy."
"Extreme MAGA Republicans in Congress, on the other hand, are threatening to wreak havoc on our economy with debt limit brinkmanship," he added. "Their extreme agenda would send the unprecedented investments we’ve made here in America – along with the jobs that come with it – overseas. And it’s all to pay for even more giveaways to the wealthiest Americans and largest corporations. Make no mistake, I will stop those efforts to put our economy at risk and take us back to the failed policies of the past."
Complicating matters is turmoil in the financial system. Two big American banks failed in March, and higher rates and tighter credit conditions could further destabilize banks and depress borrowing and spending by consumers and businesses.
The Fed is aiming to achieve a so-called soft landing — slowing growth just enough to tame inflation without causing the world’s biggest economy to tumble into recession. Most economists doubt it will work; they expect a recession later this year.
So far, the economy has proved resilient in the face of ever-higher borrowing costs. America’s gross domestic product — the economy’s total output of goods and services — expanded at a healthy pace in second half of 2022. Yet recent data suggests that the economy is losing momentum.
On Monday, the Institute for Supply Management, an association of purchasing managers, reported that U.S. manufacturing activity contracted in March for a fifth straight month. Two days later, the ISM said that growth in services, which accounts for the vast majority of U.S. employment, had slowed sharply last month.
On Wednesday, the Commerce Department reported that U.S. exports and imports both fell in February in another sign that the global economy is weakening.
The Labor Department on Thursday said it had adjusted the way it calculates how many Americans are filing for unemployment benefits. The tweak added nearly 100,000 claims to its figures for the past two weeks and might explain why heavy layoffs in the tech industry this year had yet to show up on the unemployment rolls.
The Labor Department also reported this week that employers posted 9.9 million job openings in February, the fewest since May 2021 but still far higher than anything seen before 2021.
In its quest for a soft landing, the Fed has expressed hope that employers would ease wage pressures by advertising fewer vacancies rather than by cutting many existing jobs. The Fed also hopes that more Americans will start looking for work, thereby adding to the supply of labor and reducing pressure on employers to raise wages.