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WASHINGTON, April 7 (AP) — U.S. employers added 236,000 jobs in March, reflecting a resilient labor market and suggesting the Federal Reserve may see a need to keep raising interest rates in the coming months.
The unemployment rate fell to 3.5%, not far from the 53-year low of 3.4% hit in January. Last month’s job growth was down from February’s strong gain of 326,000.
A government report on Friday suggested the economy and job market remained solid despite the Federal Reserve’s nine rate hikes over the past year.
March’s job gains could lead the Fed to conclude that the pace of hiring is still exerting upward pressure on wages and inflation and further rate hikes are warranted.
When central banks tighten credit, it usually leads to higher interest rates on mortgages, auto loans, credit card borrowing and many business loans.
Despite strong job growth last month, the latest economic signs are increasingly suggesting a slowdown may be on the horizon. Manufacturing is weakening. U.S. trade with the rest of the world is declining. While restaurants, retailers and other service companies are still growing, it is at a slower pace.
For Fed officials, curbing inflation is a top priority. They were slow to react after consumer prices began to spike in the spring of 2021, seeing it as a temporary consequence of supply bottlenecks caused by the economy’s unexpectedly explosive rebound from the pandemic recession.
The Fed will not start raising the benchmark interest rate from near zero until March 2022. Over the past year, though, it has raised interest rates more aggressively than it has since the 1980s in response to the worst inflation since then.
Inflation has steadily declined as borrowing costs have risen. The latest year-on-year consumer inflation rate was 6%, well below the 9.1% reached last June. But it was still well above the Fed’s 2% target.
Complicating matters is the turmoil in the financial system. Two big U.S. banks collapsed in March, and higher interest rates and tighter credit conditions could further destabilize banks and curb consumer and business borrowing and spending.
The Fed’s goal is to achieve a so-called soft landing – slowing growth enough to curb inflation without tipping the world’s largest economy into recession. Most economists doubt it will work; they expect a recession later this year.
So far, the economy has shown resilience in the face of rising borrowing costs. U.S. gross domestic product — the economy’s total output of goods and services — grew at a healthy rate in the second half of 2022. However, recent data suggest the economy is losing steam.
On Monday, the Institute for Supply Management, a association of purchasing managers, reported that U.S. manufacturing activity contracted for the fifth straight month in March. Two days later, the ISM said growth in the services sector, which accounts for the vast majority of U.S. employment, slowed sharply last month.
On Wednesday, the Commerce Department reported that U.S. exports and imports both fell in February, another sign that the global economy is weakening.
The Labor Department said Thursday that it has adjusted the way it calculates how many Americans file for unemployment benefits. The adjustment added nearly 100,000 jobs to the figures for the past two weeks, which may explain why mass layoffs in the tech sector this year have yet to show up on the jobless count.
The Labor Department also reported this week that employers posted 9.9 million job openings in February, the fewest since May 2021 but still well above any level before 2021.
In seeking a soft landing, the Fed said it wants employers to ease wage pressures by touting fewer job vacancies, rather than cutting many existing jobs. The Fed also wants more Americans to start looking for work, increasing the labor supply and reducing pressure on employers to raise wages. (Associated Press)
(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)
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