AP Explains solid March jobs report amid inflation
America’s employers extended a streak of robust hiring in March, adding 431,000 jobs in a sign of the economy’s resilience in the face of a still-destructive pandemic, Russia’s war against Ukraine and the highest inflation in 40 years. (April 1)
Employers added 428,000 jobs in April, extending a streak of booming payroll gains despite a recent uptick in COVID-19 cases, persistent worker shortages and the war in Ukraine.
The unemployment rate was unchanged at 3.6%, the Labor Department said Friday.
Economists surveyed by Bloomberg had estimated that 390,000 jobs were added last month.
The nation has recouped 20.8 million, or 95%, of the 22 million jobs lost early in the health crisis, leaving it 1.2 million jobs short of its pre-pandemic level. The deficit could be closed by summer.
Job growth averaged more than half a million a month in the first quarter as the pandemic eased following the surge in cases triggered by the omicron variant. And the economy now has added more than 400,000 jobs a month for 12 months, the longest such streak on record.
At a time of high inflation and rising interest rates, “The job market is providing key support to the U.S. consumer and the economy,” says economist Kathy Bostjancic of Oxford Economics.
In April, leisure and hospitality, which includes restaurants and bars, the sector hit hardest by the pandemic, led the broad-based job gains with 78,000; manufacturing added 55,000; transportation and warehousing, 52,0000; professional and business services, 41,000; financial activities, 35,000; health care, 34,000; and retail, 29,000.
Daily COVID-19 cases are averaging about 60,000 compared to 25,000 in early April, with contagious omicron subvariants continuing to spread, according to the Centers for Disease Control and Prevention. Still, that’s far below the 800,000 daily average recorded in January and omicron remains far less severe than prior virus strains.
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As a result, the spike is having less impact on economic activity, Goldman Sachs economist Spencer Hill says. Restaurant seatings have held steady at close to pre-crisis levels in recent weeks, according to Goldman and OpenTable, an online restaurant reservation service.
Meanwhile, Americans who were caring for children or staying home out of COVID fears have been streaming back into a hot labor market with sharply rising wages. That trend paused in April, however. The number of people working or looking for jobs fell by 363,000, pushing the labor force participation rate from 62.4% to 62.2%, still well below the pre-COVID level of 63.4%.
The drop came despite a record 11.5 million job openings in March, making it even tougher for firms across the country that are struggling to find workers. That tends to slow job growth during the typically busy spring hiring season, Hill says.
“At this point, the biggest factor preventing an even stronger pace of hiring stems from the lack of labor supply,” says economist Thomas Feltmate of TD Economics.
While job growth remains sturdy, it has slowed somewhat from January and February, when employers added 504,000 and 714,000 jobs, respectively. Business uncertainty created by Russia’s war in Ukraine and high energy prices could be tempering the gains, says economist Ian Shepherdson of Pantheon Macroeconomics.
Small business hiring intentions hint at a possible downshift in monthly payroll advances to about 250,000 a month, Shepherdson says, citing surveys by the National Federation of Independent Business.
Most metro areas saw a decline in the number of hours worked and employees working at small businesses last month, according to Homebase, a payroll software provider.
April’s strong report likely solidifies the Federal Reserve’s tentative plans to raise interest rates by a half point at both its June and July meetings to fight soaring inflation despite the recent stock market selloff, says economist Paul Ashworth of Capital Economics. A similar hike this week marked the Fed’s largest such move in 22 years.