Washington: Monthly job creation in the world’s largest economy tumbled in March to its lowest level since September, the government reported Friday, a decline attributed in large part to harsh weather.
The slowdown in hiring was likely to be unwelcome news at the White House, as President Donald Trump presses ahead on a multi-front confrontation with China and other trading partners that has alarmed much of the business community and Republican Party.
US employers added only 103,000 net new positions last month, the Labor Department said in the closely-watched report. That gain was less than a third of the surge seen in February and far lower than the 175,000 analysts expected.
But the unemployment rate held steady at the 17-year-low of 4.1 percent for the sixth month in a row while wages rose faster than expected, according to the report.
The weak hiring followed more trade turmoil overnight, as Trump sharply raised the ante in a fresh tit-for-tat exchange with Beijing, calling for tariffs on an additional $100 billion in Chinese imports.
US financial markets dove Friday on the trade brinkmanship and jobs data double-whammy.
But analysts said the March jobs slowdown was at least partly attributable to weather effects, with February hiring boosted by unusually warm temperatures that were then chilled by wintery conditions last month.
And despite a steep downward revision to January, an upward revision made February’s results even stronger, putting average job creation for the first quarter of the year at 202,000, well above the 188,000 average recorded in all of 2017.
“The weakness in payrolls likely reflected payback for exaggerated strength rather than weather effects in March alone,” Jim O’Sullivan of High Frequency Economics said in a client note.
“The trend remains more than strong enough to keep unemployment trending down over time.”
Job creation slowed precipitously or even reversed in industrial sectors across the economy, which gave back some of the gains recorded in February’s monster hiring spree.
The construction workforce shed 15,000 positions — a sector more vulnerable to weather — while the retail industry shrank by 4,400 employees.
Even sectors that posted gains, such as manufacturing, health care and mining, saw job creation slow while government hiring was negligible.
Fears of a faster Fed?
Meanwhile, worker wages rose faster than economists had predicted, gaining 0.3 percent for the month to an average of $26.82 an hour.
Worker pay is now up a robust 2.7 percent over March 2017, well above the 2.3 percent gain in the Consumer Price Index for the same period — suggesting a tight labor market may at last be driving up compensation and could spur higher inflation.
However Chris Low of FTN Financial said those fearing higher interest rates from the Federal Reserve this year could relax a little since “the possibility the Fed would abandon gradual in favor of more aggressive tightening has diminished.”
Markets have been on tenterhooks since February, fearing the central bank could raise rates four times this year instead of the forecast three amid gathering forces that could accelerate price pressures.
Anecdotal reports collected by the Fed — and the historically low rates of layoffs — indicate employers are struggling to fill open positions and are starting to offer higher pay to attract and retain workers.
Diane Swonk, chief economist at Grant Thornton, said, “A trade war would dramatically complicate the Fed’s job because tariffs raise inflation and slow growth.”
On Wall Street, stocks plunged, driven even lower during the day as the White House issued ever sterner messages on trade with China. All three major averages closed down more than two percent.
AFP