The Labor Department released its monthly hiring and unemployment figures for March on Friday morning, providing an important snapshot of the American economy.
Everyone can relax.
The solid job gains that have come to define the current economic expansion resumed in March. The gain in hiring, though widely forecast, will help clear some of the doubts hanging over the economy. Though the economy is expected to slow this year from the strong pace of 2018, Friday’s report was a welcome sign.
“We think the labor market is the strongest thing in the U.S. economy right now,” said Luke Tilley, chief economist at Wilmington Trust. “We’re encouraged by the wage gains.”
While the March number was reasonably strong, average monthly job growth appears to be slipping. In the first three months of the year, the economy added 180,000 jobs on average, down from an average of 223,000 for all of 2018.
The Big Picture
The United States economy is still enjoying one of its longest expansions on record. It has produced nearly 21 million jobs since the labor market bottomed out in 2010, and the unemployment rate has plunged from a peak of 10 percent in October 2009.
But in recent months, doubts have grown. The invigorating effects of the tax cuts enacted at the end of 2017 are expected to fade. Large overseas economies have slowed, in part a reaction to continuing trade tensions. And while the stock market has rallied since a rout at the end of last year, other important financial indicators — such as government bond yields — suggest that investors expect growth to moderate.
Even so, economists have seen a healthy labor market in the United States.
“The lesson of this recovery is that the labor market keeps chugging on despite whatever turmoil happens around it,” said Martha Gimbel, research director at the job-search site Indeed.
Most economists shrugged off the anemic job report for February, saying the number could have been affected by cold weather and the partial shutdown of the federal government. In recent years, low monthly jobs numbers have usually been followed by a rebound.
Several economic indicators released since the February report suggested that the economy was still capable of adding 150,000 or more jobs a month. The number of people filing for unemployment benefits for the first time has declined to lows not seen in decades, and recent surveys of the construction and manufacturing industries did not suggest that employers were pulling back.
“There is nothing in the business sentiment surveys that suggests hiring was off in March,” said Ellen Zentner, chief United States economist at Morgan Stanley.
The Wages of Growth
For years, even as the economy added jobs and unemployment kept falling, wage increases were lackluster. But employees now appear to be getting solid raises. The 3.4 percent year-on-year increase in February was more than double the annual inflation rate for the month.
“This means households and workers have pretty strong purchasing power and they can spend more at the mall,” said Beth Ann Bovino, United States chief economist at S&P Global Ratings.
With the jobless rate at a historic low, employers have to offer higher wages and more attractive benefits to lure workers. Julia Pollak, a labor economist at ZipRecruiter, a job-search company, said that was reflected in the job postings on her company’s site. In March, 34 percent of the openings advertised on ZipRecruiter had benefits, up from 19 percent a year earlier.
“And the range of perks is growing,” Ms. Pollak said.
Steady wage growth may be the catalyst that helps keep the economic expansion going: Higher wages encourage more spending, and companies that wish to meet that extra demand have to hire more people.
Ms. Pollak said this could be seen in the leisure and hospitality industries, which benefit when people have more money to spend on eating out and traveling. In the past year, the number of jobs in those two sectors grew at a significantly faster pace than in the job market over all.
“It’s not clear that we’re headed toward an inevitable decline,” she said.
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