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103,000 jobs added in March; jobless rate stays at 4.1%
THE US economy created the fewest jobs in six months in March as the boost from mild temperatures faded, but a pickup in wage gains pointed to a tightening labour market, which should allow the Federal Reserve to raise interest rates further this year.
Nonfarm payrolls increased by 103,000 last month as construction and retail sectors shed jobs, the Labor Department said on Friday. That was the smallest increase since September and followed a 326,000 surge in February. Temperatures returned to normal in March, with some snowstorms. Job growth is also moderating as the labour market hits full employment. There has been an increase in reports of employers, especially in the construction and manufacturing sectors, struggling to find qualified workers.
March's job growth was below the 202,000 average of the past three months and close to the roughly 100,000 jobs per month needed to keep up with growth in the working-age population.
The unemployment rate held steady at 4.1 per cent for a sixth straight month, even as people left the labour force.
Economists polled by Reuters had forecast the economy adding 193,000 jobs last month and the unemployment rate dropping to 4.0 per cent.
With labour market slack diminishing, wage growth picked up a bit in March. Average hourly earnings rose eight cents or 0.3 per cent last month after edging up 0.1 per cent in February. The gain lifted the annual increase in average hourly earnings to 2.7 per cent from 2.6 per cent in February.
Economists say annual wage growth of at least 3 per cent is needed to lift inflation towards the Fed's 2 per cent target.There is hope that wage growth will accelerate in the second half of the year and allow the Fed to continue raising interest rates.
The Fed increased borrowing costs last month and forecast two more interest rate hikes this year. Economists did not see an impact on hiring in the near-term from a recent stock market selloff, which has caused a tightening in financial conditions.
Despite the slowdown in job growth in March, steady wage gains should support consumer spending amid signs gross domestic product growth moderated in the first quarter. Growth estimates for the first quarter are mostly below a 2 per cent annualised rate.
Growth in the January-March period tends to be weak because of a seasonal quirk. The economy grew at a 2.9 per cent pace in the fourth quarter. Growth this year is seen boosted by a US$1.5 trillion income tax cut package and increased government spending, which economists say will offset some of the impact from the stock market gyrations. REUTERS