WASHINGTON: US employment growth accelerated from a 17-month low in March, assuaging fears of an abrupt slowdown in economic activity, but a moderation in wage gains supported the Federal Reserve’s decision to suspend further interest rate increases this year. Milder weather boosted hiring in sectors like construction, but worsening worker shortages and lingering effects of tighter financial market conditions at the turn of the year left job growth below 2018’s brisk pace. The Labor Department’s closely watched employment report on Friday also showed a small upward revision to February’s meager job gains.
“This was a Goldilocks report, with a rebound in job growth to calm fears of an imminent recession, and wage growth that was solid enough without triggering inflationary concerns,” said Curt Long, chief economist at the National Association of Federally-Insured Credit Unions. “The Fed will be pleased, as it supports their present stance of holding firm on rates.”
The US central bank last month halted its three-year campaign to tighten monetary policy, dropping projections for any rate hikes this year after lifting borrowing costs four times in 2018. Nonfarm payrolls rose by 196,000 jobs in March. Data for February was revised modestly up to show 33,000 jobs created instead of the previously reported 20,000. February job gains were the smallest since September 2017.
The economy has shifted into lower gear as stimulus from the Trump administration’s $1.5 trillion tax cut package as well as increased government spending fades. A trade war between Washington and Beijing, and slowing global growth have also taken a toll on the economy, which in July will celebrate 10 years of expansion, the longest on record.
President Donald Trump has boasted about the economy, especially the labour market, as being one of the big wins of his first term in office. Sluggish growth, if it persists, could pose a challenge to Trump’s re-election hopes next year. Trump, who has blamed the Fed’s relatively tighter monetary policy for the slowdown in economic activity, on Friday urged the central bank to cut interest rates.
“I think they should drop rates,” Trump told reporters. “I think they really slowed us down.”
Economists polled by Reuters had forecast payrolls increasing by 180,000 jobs last month. The pickup in job growth helped to boost US stocks. The dollar rose marginally against a basket of currencies, while US Treasury prices were mixed.
The employment report added to fairly upbeat construction spending and factory data that led Wall Street banks to boost their growth estimates for the first quarter. — Reuters
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