The labor market added 236,000 jobs in March, according to the monthly Employment Situation released this morning by the Bureau of Labor Statistics. This is down significantly from last month which reported a gain of 326,000 jobs, revised up and is a sign that the economy may be cooling off quicker than economists thought. Today’s report combined with the recent uptick in jobless claims means that we could be headed for a hard landing into a recession, something the Federal Reserve has been working hard to avoid.
The labor market showed prolonged resiliency throughout 2022, but recent data has confirmed that federal rate hikes are finally affecting employment data. Reports of layoffs and job cuts have riddled the news in recent weeks, starting a major shift away from the labor shortages that have plagued employers for the past year and a half. The ADP National Employment Report, released Wednesday, showed an addition of 145,000 private payrolls. “Our March payroll data is one of several signals that the economy is slowing,” said Nela Richardson, Chief Economist at ADP, “Employers are pulling back from a year of strong hiring and pay growth, after a three-month plateau, is inching down.” Slowing job gains are a key indicator that the labor market is weakening.
According to the Job Openings and Labor Turnover Summary, job openings decreased by 632,000 in February to 9.9 million, while the number of hires and total separations changed little. The job openings rate changed most for large establishments, with more than 5,000 employees. The Expectations Index, released as a part of the Consumer Confidence Survey, increased from 70.4 in February to 73.0 in March. “However, for 12 of the last 13 months – since February 2022 – the Expectations Index has been below 80, the level which often signals a recession within the next year.”
Leisure and hospitality led job gains again with 72,000 added jobs in March, with food services and drinking places increasing by 50,000 jobs. Government employment rose by 47,000 jobs, and professional and business services increased by 39,000. Health care added 34,000 jobs, with notable job growth in home health care services, which added 15,000 jobs. Employment in transportation and warehousing, retail trade, and construction changed little. The average hourly earnings for nonfarm payrolls increased by 9 cents and the average workweek shortened by .1 hour.