Washington, April 1 (FN Agency) US employers added 431,000 jobs in March, some 12 per cent lower than economists’ expectations, but the jobless rate still moved down to 3.6 per cent from a previous 3.8 per cent, Labor Department data showed on Friday. “Total nonfarm payroll employment rose by 431,000 in March, and the unemployment rate declined to 3.6 per cent,” the Bureau of Labor Statistics, a unit within the Labor Department, said in a news release. An unemployment rate of 4 per cent or below is defined by the Federal Reserve as maximum employment. Economists polled by US media had forecast jobs to expand by 490,000 in March from a growth of 678,000 in February. The monthly growth or decline in jobs is being closely watched by the Fed to decide on the rate hikes that will be needed to contain inflation expanding faster than an economy growing at its quickest pace in four decades.
After contracting 3.5 per cent in 2020 from disruptions forced by Covid-19, the US economy expanded by 5.7 per cent in 2021, growing at its fastest pace since 1982. But inflation grew even more. The Personal Consumption Expenditure Index, a US inflation indicator closely followed by the Fed, rose by 5.8 per cent in the year to December and 6.4 per cent in the 12 months to February, Both readings also indicated the fastest growth since 1982. The Fed’s own tolerance for inflation is a mere 2 per cent per year. The central bank slashed rates to nearly zero after the coronavirus outbreak in March 2020 and kept them unchanged for two years to enable economic recovery. Last month, for the first time since the pandemic, the Fed’s policy-making Federal Open Market Committee (FOMC) raised rates by 25 basis points.
Now, unyielding inflation is prodding FOMC officials to consider a 50-basis point increase at the committee’s next two meetings in May and June. The central bank has stated that it could raise rates by a maximum seven times this year and continue its monetary tightening into 2023 to bring inflation back to its 2 per cent-per year target. Fed Chairman Jerome Powell said last month the labor market was “extremely tight” with robust demand and subdued supply. He also noted that more than a million positions were filled within the first two months of the year. The government’s monthly Job Openings and Labor Turnover Summary report earlier this week showed that job openings hovered near record highs in February as vacancies continued to outpace hires in an unemployment market that remained overwhelmingly in favor of workers. Aside from ramping job numbers, the United States is experiencing one of the greatest transformations of its employment market as Covid-19 measures upended labor supply and work trends, putting employees’ demands above those of employers.