In March, amid rising inflation and fears of a recession coming on board, there was a slight decrease in the number of jobs created by the U.S. Economy. This is because the labor market became tighter.
Nonfarm payrolls increased 431,000 per month and the unemployment rate was 3.6%. This is according to the Bureau of Labor Statistics Friday. Dow Jones surveyed economists who were looking for 490,000. Payrolls, and 3.7% unemployment.
The alternative measure of unemployment that includes discouraged workers as well as those who hold part-time work for economic reasons, fell to 6.9% in the seasonally adjusted month, down by 0.3 percent from the previous month.
As the unemployment rate rose one-tenth to 62.4% in February 2020, it was within 1 point from its pre-pandemic levels in February 2020. 418k workers added to the labor force, bringing it within 1 point of its pre-pandemic level in February 2020.
In line with inflation expectations, the average hourly earnings increased by 0.4%. The average hourly earnings rose almost 5.6% on a 12-month-by-12 month basis. This is close to the forecast. Average workweek, which is a measure of productivity, fell by 0.01 to 34.6 hours.
This report is not surprising. Simona Mocuta (chief economist at State Street Global Advisors) said, “There was nothing surprising.” “Even though this report is negative, this still indicates a strong labor market.”
This has been true for a lot of the past. Covid pandemicThe era of leisure and hospitality drove job creation to 112,000.
The total number of professionals and businesses contributed 102,000, with retail increasing 49,000 and manufacturing adding 38,000. Others reporting growth were social assistance (25,000), construction (19,000), and financial activities (16,000.
A survey of household members showed a more positive picture with a total increase in employment of 736,000. The total level of employment was now within 408,000 from pre-pandemic.
Also, revisions to previous months were very strong. In January, the total rose to 504,000. Meanwhile February saw a revision of 750,000 to match the initial count at 678,000. Job growth was 1.685 million in the first quarter. This is an average of just 562,000.
For each group, Black unemployment fell to 6.2%. The rate of Asians was 2.8% while Hispanics were 4.2%.
The Fed is the focus
These numbers are indicative of an economy that is at critical points in its recovery from the pandemic. The top-line has seen strong hiring, but there are still about 5,000,000 more jobs than workers available.
In the first quarter, growth as measured in gross domestic product will be very low. Tapering is a result of the inventory rebuild that was completed last year, which helped drive the largest annual gains since 1984. Multiple factors also kept progresses under control until 2022.
Inflation has been the most prominent topic. Since the 1980s, it’s been running at an accelerating pace. Consumer spending is being restricted as wages have not been able match prices. However, the war in UkraineThis has lowered sentiment and caused supply chain problems. The red-hot housing market has been slowing due to rising interest rates.
Federal Reserve will increase interest rates to fight inflation.
The markets are now anticipating that there will be rate hikes at all six Fed meeting this year. This could start with a move of half a percentage point in May, and continue to 2.5 percentage points until 2022.
This outlook was not affected by Friday’s report.
Mocuta, State Street’s economist said that “the wage picture” is crucial. Although the report doesn’t change the immediate trajectory of the economy, it does give hope that there might be some increases over the next few years. If you do get evidence that wages are slowing at margins, it may allow the Fed to reconsider.
Hospitality is looking for a turnaround
The pandemic has been particularly hard on the hospitality sector. Despite the fact that hiring continues at bars and hotels, restaurants and other establishments, there are still challenges.
The National Restaurant Association reports that 90,000 establishments were closed by 2021. However, sales fell 7.5% from their pre-pandemic peak. The unemployment rate in the industry fell to 5.9% in March from February 2020, which is 0.7 percent less than the month before.
Dirk Izzo is the president and general manager at NCR Hospitality. He said that there are many strategies being used by the industry to survive. The pandemic has seen technology play a major role in helping companies cope with the shortage of workers. Companies are turning to handheld devices and QR-coded menus, as well as other tools, to provide better customer service.
Izzo explained that the staff is having trouble finding enough people for both the front and back. They’ve taken tables from the restaurants to find staff.
Establishments which have exhausted government subsidies are closing down. Those that are still open will be forced to raise prices to counter inflation.
However, there was optimism about the potential for the sector to rebound with the pandemic subsiding and normal people returning back to their usual behaviors.
Izzo claimed that people would come out of this situation stronger than they were before. They will need to invest more in technology. This is going to be positive for the sector, and I agree with that. This is going to be bumpy.