Lede

US employers added just 236,000 jobs in March, below economists’ expectations and indicating the labor market is cooling amid the Federal Reserve’s yearlong rate-hiking campaign to chill inflation.

Summary

• March’s 236,000 new jobs is the smallest monthly gain since December 2020 and first jobs report in 12 months below expectations.
• Despite the slowdown, the unemployment rate dropped to 3.5%, according to the March jobs report released Friday by the Bureau of Labor Statistics.
• Over the past year, the labor market has seen a net gain of over 4.1 million jobs, averaging 345,417 jobs gained per month, helping drop the unemployment rate to decades-low levels.
• Industries such as leisure and hospitality, health care, and government continued to lead the way in job gains, while retail trade, temporary help, manufacturing, construction, and information services reported losses.
• Employment in leisure and hospitality still has yet to recover to pre-pandemic levels, with the industry about 368,000 jobs shy of February 2020 employment levels.
• The average workweek inched down to 34.4 from 34.5 hours, indicating employers could be starting to cut hours, temporary employment fell, and construction lost jobs for the first time since January 2022.
• While the job market remains above pre-pandemic norms, labor market data teed up a more moderate jobs report, with job openings falling to 9.93 million, and ADP’s private-sector job gains coming in at 145,000 for March, landing below expectations of 200,000.
• Labor market data released earlier in the week showed significant revisions and seasonal adjustments to better reflect labor market dynamics since the pandemic, with a clear upward trajectory in initial claims since the beginning of February.
• Analysts predict unemployment insurance claims data will continue to provide an early signal into whether the labor market is likely to cool further in the coming months.