US job growth strong in March; unemployment rate falls to 3.5%
Data for February was revised higher to show 326,000 jobs were added instead of 311,000 as previously reported
The US economy in March continued to exhibit robust job creation, resulting in a decline in the unemployment rate to 3.5%. This persistent labor market tightness has raised speculations of a potential interest rate hike by the Federal Reserve next month.
According to the latest employment report from the Labor Department, nonfarm payrolls rose by 236,000 jobs in the previous month. Additionally, the data for February was revised upward, indicating that 326,000 jobs were added, as opposed to the initially reported 311,000.
Some of the slowdown in hiring reflected the fading boost from unseasonably mild weather in January and February.
Some economists had predicted an increase of 239,000 in payrolls, with estimates ranging from 150,000 to 342,000. To sustain pace with the growth in the working-age population, the economy needs to generate approximately 100,000 jobs per month.
As with most recent economic data, it was too early for financial market stress, triggered by the failure of two regional banks in March, to show up in the employment report.
The unemployment rate fell to 3.5% from 3.6% in February. Average hourly earnings rose 0.3% in March after gaining 0.2% in February. That lowered the annual increase in wages to 4.2% from 4.6% in February, which was still too high to be consistent with the Fed's 2% inflation target. Fed officials will now await inflation data later this month to gauge the impact of their year-long monetary policy tightening campaign.
According to CME Group's FedWatch tool the financial markets were leaning toward the US central bank increasing rates by another 25 basis points at the May 2-3 policy meeting.
The Fed last month raised its benchmark overnight interest rate by a quarter of a percentage point, but indicated it was on the verge of pausing further rate hikes in a nod to financial market stress. It has hiked its policy rate by 475 basis points since last March.
(With agency inputs)
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Business NewsNewsUS job growth strong in March; unemployment rate falls to 3.5%
First Published:7 Apr 2023, 07:03 PM IST
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