Pace of US hiring weakens with just 126K jobs added in March
WASHINGTON (AP) -- The weakening U.S. economy spilled into the job market in March as employers added only 126,000 jobs, the fewest since December 2013, snapping a streak of 12 straight months of gains above 200,000.
The Labor Department said Friday that the unemployment rate remained at 5.5 percent.
Economic growth has been hammered this year by harsh winter weather, factory slowdowns and lackluster construction activity. The manufacturing, construction and government sectors each shed workers, while hiring at restaurants plunged from February.
In addition to reporting the sluggish hiring in March, the government revised down its estimate of job gains in February and January by a combined 69,000.
Wage growth in March remained modest. Average hourly wages rose 7 cents to $24.86 an hour.
Past job growth, along with cheaper gasoline, has yet to significantly boost consumer spending. A continued deceleration in hiring could delay the Federal Reserve from raising interest rates in mid-year.
The Fed signaled last month that it would be cautious in raising rates from record lows. The Fed has yet to rule out a June rate hike. But many analysts expect the first increase no earlier than September. In part, that's because Fed officials have revised down the range of unemployment they view as consistent with a healthy economy to 5 percent to 5.2 percent from 5.2 percent to 5.5 percent previously.
Chair Janet Yellen has stressed that even when the Fed begins raising rates, it will do so only very gradually.
A Fed rate hike would point to stable growth. But the economy has weakened in the first two months of 2015, in part because of the tough winter.
The Atlanta Federal Reserve estimates that growth was flat during the first three months of 2015. JPMorgan Chase says that growth is tracking at an annualized rate of 0.6 percent. Those forecasts are significantly below the annual growth rate of 2.2 percent in the final three months of 2014 and a rate of more than 4 percent in the middle of last year.
Factory orders have been mixed, having dropped sharply in January before ticking up modestly in February. Cheaper oil has led energy companies to halt orders for pipelines and equipment, hurting manufacturers. At the same time, the strengthening dollar has made American-made goods costlier abroad, thereby cutting into exports.
This year's job growth has yet to ignite a larger boom in consumer spending. Average hourly wages have risen a tepid 2 percent in the past 12 months. McDonald's, Wal-Mart, the Gap and other major employers have announced raises for their lowest-paid employees. But those pay raises are staggered and unlikely to fuel faster wage growth.
The economy has disproportionately added low-paying jobs in the retail and restaurant sectors since the recovery from the Great Recession began nearly six years ago. Adding jobs in the lowest-paid industries can suppress average hourly wages, even when employers are rewarding cashiers, waiters and sales clerks with pay bumps.
Yet evidence of a strong spring rebound might hinge on hiring by retailers and restaurants, noted Tara Sinclair, a George Washington University professor and chief economist at Indeed, the job-posting web site.
Continued hiring by retailers and restaurants would suggest that employers anticipate solid demand from customers, who might finally be comfortable spending their savings from cheaper gas. Prices at the pump have plunged 33 percent over the past year to a national average of $2.40 a gallon, according to AAA.
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