The US labor market added 431,000 jobs in March and the unemployment rate fell two tenths compared to February, to 3.6%, as reported on Friday by the Government Labor Statistics Office. The largest increase was registered in the leisure and restaurant sector, which was the one that registered the most job destruction during the pandemic, with 112,000 hires; in professional and business services (102,000 jobs), retail trade (49,000) and industry (38,000).
The unemployment rate for March, with only six million unemployed out of a population of 330 million, is very close to that registered in February 2020, just before the start of the pandemic, when it was 3.5%, with 5, 7 million unemployed. However, the number of people with a job is still 1.6 million below the pre-pandemic level.
The recovery of the labor market to figures of practically full employment, one of the conditions of the Federal Reserve to tighten its monetary policy, continues at a good pace, with wages on the rise and despite an evident slowdown compared to February, when 750,000 jobs, almost double that of March. The US central bank therefore has a free hand for a new rise in interest rates – analysts even think of 50 basis points – at its next meeting, which will take place on May 3 and 4.
From the data of the Department of Labor, which includes only non-farm payrolls, the resistance of the US economy is inferred in a situation of uncertainty, in full escalation of inflation, the first rate hike in March and the war in Ukraine, and its added pressure on global supply chains (which in turn worsens forecasts for rising prices). The employment data in March -one of the objectives of the Fed, unlike other central banks, is to seek full employment- and those of the CPI that will be known on the 12th will be decisive for the decision of the monetary policy committee of the monetary authorities.
If consumption retracts as a result of high inflation, at record highs since the 1980s, the most thriving sector in terms of employment, the restaurant industry, may be affected. Analysts at Goldman Sachs forecast the overall hiring pace will slow to 200,000 a month in the coming quarter, the prologue to a further decline. Companies added half a million workers a month, on average, over the past year, but many economists believe the combination of inflation and higher interest rates may slow job creation in the short term.
Hiring demand is being boosted by a sharp drop in Covid-19 infections, which has prompted the removal of restrictions in the country. The balance for March still shows no signs of the impact on the labor market of the war in Ukraine, which has pushed up energy prices to exceed 4 dollars per gallon of gasoline (3.7 liters). The Labor Department also revised up job creation data for January and February. Adding both months, there were 95,000 more jobs than initially reported.
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