Hiring regains a spring in its step
WASHINGTON — A return to solid hiring in March, reported by the government Friday, eased concerns that the U.S. economy was slipping back into lower gear.
Employers added 192,000 jobs in March, and the unemployment rate held steady at 6.7 percent. Coming on the heels of two consecutive months of what was thought to have been weak hiring, the strong March hiring suggests that the economy instead shrugged off bad weather and showed underlying strength.
“The job market is back on track after being sidetracked by the brutal winter weather,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics. “The economy is back to creating close to 200,000 jobs per month, which is resulting in a steadily tightening job market.”
That means the jobless rate is likely to decline, Zandi said, and will begin to put upward pressure on wages, attracting more workers back to the labor force.
“All the preconditions for even better job growth this spring are in place. Businesses are highly profitable, their balance sheets are strong, and labor costs are low,” he said. “The only missing ingredient had been confidence, but even that is improving as the political vitriol in Washington has faded.”
The Labor Department on Friday also revised hiring estimates for previous months. They show that hiring wasn’t as weak as had been thought. February’s first estimate of 175,000 jobs was revised to 197,000. January numbers were also increased, from 129,000 to 144,000.
Those revisions suggest that winter weather wasn’t as big a hit on hiring as had been feared. But winter’s impact was felt in the measure of hours worked. The average workweek for all workers grew by 0.2 hour in March, reversing a net decline over the three consecutive previous months.
“Some of the decline in those months was likely due to unusually severe winter weather, including the major snowstorm that hit during the survey week in February,” said Jason Furman, the head of the White House Council of Economic Advisers. “Consistent with the unwinding of weather effects, the average workweek in manufacturing jumped in March and returned to its 68-year high.”
The labor force participation rate — a measure of how many working-age Americans have jobs or are looking for them — inched up to 63.2 percent. A declining participation rate has vexed economists, who are trying to determine how much of it reflects demographic trends and how much is related to tepid economic growth.
Some of the previous declines were likely due to baby boomers retiring early and other factors, but some stemmed from the economy itself.
“At least some of the decline is cyclical and reflects the frustration of trying to find a job when unemployment is high and job turnover is extremely low,” Ethan Harris, a co-head of global economics research for Bank of America Merrill Lynch, wrote in a note to investors.
“We expect a reversal as young workers finish their extra time in school and as middle-age workers attempt to address widespread inadequate retirement savings.”
About 10.5 million Americans were unemployed last month, and more than a third of them — about 3.7 million — had been out of work for 27 weeks or longer.
Professional and business services hiring rose by 57,000 last month, pointing to improvement in the white-collar sector. Temporary help services, often a harbinger of future hiring, improved by more than 28,000 jobs. Retailers, a loser in the cold months of January and February, added more than 21,000 jobs last month.
“We’re encouraged by the progression seen in March related to hiring and other indicators that point to overall economic growth,” said Jack Kleinhenz, the chief economist for the National Retail Federation.
“First-quarter results have been less than stellar thus far thanks to a variety of factors, including unusually bad weather in almost every part of the country. As the year progresses, I expect the job market to strengthen, which will put consumers in a position to feel even more confident about spending, bolstering the sub-par economic recovery.”
The struggling construction sector posted a gain of 19,000 jobs. That stands out, especially compared with the labor-intensive manufacturing sector, which shed 1,000 jobs last month.
“While this was disappointing, the good news was that manufacturers added 15,000 workers more than previously estimated in January and February,” said Chad Moutray, the chief economist for the National Association of Manufacturers. “Since August, the manufacturing sector has averaged 12,125 additional workers each month, a sign that the rebound that we have seen since the beginning of the third quarter has resulting in a pickup in hiring.”
The Federal Reserve is likely to stick to its timetable for removal of economic stimulus. The Fed has been tapering back its purchases of government and mortgage bonds to support the economy, now at a pace of $55 billion a month. It’s expected to end the bond buying late this year or early next year.