U.S. payroll gains slowed in March while the jobless rate unexpectedly dropped to the lowest in almost a decade, suggesting the labor market is returning to a more sustainable pace of progress.
The 98,000 increase followed a 219,000 rise in February that was less than previously estimated, a Labor Department report showed Friday in Washington. The median forecast in a Bloomberg survey of economists called for a 180,000 advance. The unemployment rate fell to 4.5 percent from 4.7 percent, and wage gains slowed to a 2.7 percent year-over-year pace.
While the payroll figures are the weakest since last May and represent a pullback from the first two months of the year, it may reflect that things are getting back to normal. Employment has been on a healthy run, giving Federal Reserve policy makers enough confidence to raise interest rates in March and forecast two more hikes this year. Businesses have been challenged by a dwindling pool of unemployed, and are gradually giving in to pressures to raise wages in order to attract and retain talent.
“Even if payrolls are slowing down, I’m not sure that that means the labor market is weakening,” said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC. “To the extent that it is slowing down or going to slow down, it’s probably more a function of tight supply than weakening demand.”
The March payroll gains compare with last year’s average of 187,000 a month, a pace that analysts had forecast to decline to 181,000 in 2017. Revisions to the previous two months subtracted a total of 38,000 jobs from payrolls, making for an average first-quarter rise of 178,000 a month.
President Donald Trump has set a goal of adding 25 million jobs over 10 years, which would require additions of 208,000 a month, or 2.5 million positions a year.