Hiring slows, but US unemployment falls to 10-year low
U.S. employers cut back sharply on hiring in March, yet Friday’s jobs report still had much to be encouraged about, including a drop in the unemployment rate to 4.5 percent, the lowest in a decade.
Employers added just 98,000 jobs, the Labor Department said. It was barely half the previous month’s gain.
Yet unemployment dropped from 4.7 percent, reaching its lowest point since May 2007. While the rate has fallen in the past because of unemployed workers who had given up looking, it happened this time because of a healthy gain in the number of people with jobs.
"Within the disappointing 98,000 net new jobs added, there seems to be a lot more going on beneath the surface, and what is going beneath the surface is mostly good," said Mark Vitner, an economist at Wells Fargo.
Here are the positive aspects of the report, followed by some parts that were not so hot:
— JOB GROWTH STILL OK
In the past three months, employers have added an average of 178,000 jobs a month. That’s much better than March’s increase and is closer to the underlying trend, economists said.
That’s also just below the average gains of 187,000 jobs a month last year. Hiring should rebound closer to that level in the coming months, economists say.
— HIT FROM WEATHER PROBABLY TEMPORARY
One reason last month’s weak gain was probably a blip is that harsh winter weather in New England and the Midwest most likely hurt hiring in construction, retail and other weather-sensitive industries. Also, construction companies reported huge job gains in January and February, when the weather was unseasonably warm, so they didn’t need to engage in their usual spring hiring.
— BETTER JOBS
The job gains last month, while tepid, occurred in better-paying industries, such as manufacturing and a category that includes accounting, engineering and other professional services.
Lower-paying fields, such as retail, cut jobs, while a category that includes restaurants and hotels posted a small gain.
And all the new jobs added were full time, the government said. The number of Americans who are working part time but would prefer a full-time job fell.
An alternative unemployment measure, which includes involuntary part-time workers, fell to 8.9 percent, its lowest level since December 2007, when the Great Recession started.
That’s down from a peak in 2010 of 17.1 percent.
Yet there were some discouraging signs:
— MORE OPTIMISM, SAME ECONOMY
Consumer and business optimism has soared since the presidential election. Many companies eagerly await the tax cuts and deregulation promised by President Trump.
Yet so far, there is little evidence that better sentiment has translated into more hiring, spending or economic growth. Companies are adding workers at the same pace they did last year. And consumers trimmed their inflation-adjusted spending in January and February.
— STAGNANT WAGES
Average hourly earnings climbed 2.7 percent over the past year, not much of a win for workers. And after factoring in inflation in the past year, paychecks are essentially flat.
"Right now, real wages are basically stagnant," said Megan Greene, chief economist at Manulife Asset Management. "That’s why things like retail sales growth and other indicators for consumer demand have been so anemic."
The situation is even tougher for front-line workers, who account for the majority of all jobs. Their wages have risen just 2.3 percent, so after inflation they have fallen.
— HIRING NOT WIDELY SPREAD
The drop in the unemployment rate is good news, but it doesn’t mean everyone has benefited. Women made up nearly all those who gained jobs, with the unemployment rate for adult men unchanged, at a still-low 4.3 percent.
— DISAPPEARING RETAIL JOBS
Online shopping is taking its toll on traditional retailers who can no longer compete on price or convenience as they once did.
Department and general merchandise stores trimmed 34,700 workers from their payrolls last month. Clothiers let go of 5,800. Amid these job losses, wage growth for retail workers was a paltry 1.1 percent before inflation, far worse than the national average.