In March, the US economy created a stellar 228,000 new jobs. All of this detail comes from a preliminary report that was released by BLS on Friday. In spite of this strong net growth, labor market slack measured by the unemployment rate ticked up a bit from 4.1% to 4.2. Included in this page report is the notable fact that services sector led the job growth. Health care and social assistance and leisure and hospitality were big drivers. The nation’s labor market has posted 51 straight months of job gains, which corresponds to the second-longest expansion in history.
The multicolor job gains are more evidence that the labor market remains strong. Second, this strong market creates a solid underpinning for consumer spending, which can account for more than two-thirds of all economic activity. According to the most recent employment report, wage growth is continuing to cool. Because of this, folks are bracing for the next Consumer Price Index to show an even larger inflation reduction.
Services Sector Leads Job Growth
The private services sector was the biggest engine of job creation by far last month, adding 19,000 jobs. In fact, health care and social assistance by itself accounted for much of this expansion, adding 77,800 new positions. In addition, leisure and hospitality bounced back from some recessionary job losses, adding 43,000 positions.
Ger Doyle, the US country manager for employment agency Manpower Group, painted a rosy picture of the overall employment landscape.
“Today’s jobs report is a welcome sign, given the negative indicators we saw leading into it.” – Ger Doyle
Even with all the positive job numbers, Doyle warned on some indicators of labor market cooling.
“While the US labor market is proving to be resilient, there are signs of cooling that are consistent with employers navigating uncertainty.” – Ger Doyle
This mixed message is a reminder of the complicated reality on-the-ground with this economic rebound, wherein new job growth comes at a hefty price.
Unemployment Rate and Market Reactions
June’s solid job growth gave a rosy impression, but the increase in the unemployment rate was cause for alarm. That is an indicator that there are more people coming into the labor force evidenced by the increase from 4.1% to 4.2%. Yet, it highlights potential increases in job insecurity. Analysts will continue to watch these trends with an eye toward changes that affect the economy and other forces at work.
President Donald Trump tweeted his approval of the employment figures, declaring them to be “great job numbers, far more than expected.” His administration has kept up the pressure on the Federal Reserve to change its monetary policy to support stronger economic growth.
This latest call for interest rate cuts comes against a backdrop of moderating wage gains and an outlook for inflation to continue to moderate. As economists try to understand what these factors mean, they point to consumer sentiment and the ways in which it is spurring positive economic activity.
Future Outlook and Economic Concerns
Going forward, the experts continue to be cautiously optimistic about future economic activity. Kathy Bostjancic, chief economist at Nationwide, recognized risks from an administration bent on engaging in a trade war.
“We don’t anticipate a recession, but you could certainly see weaker growth, higher inflation and a hit — either major or minor — to the labor market if these tariffs and also retaliatory tariffs on the US go forward.” – Kathy Bostjancic
The Department of Government Efficiency’s latest move isn’t expected to shake up the new or existing labor market anytime soon. New trade agreements and tariff negotiations might still determine whether future job growth is a boon or bust for consumer confidence.