According to the Labor Department’s report on Friday, the U.S. economy failed to meet the analysts’ estimates of 245,000 new jobs in March; instead, only 126,000 were added, keeping the unemployment rate steady at 5.5 percent.
Economists did not predict such a sudden slowdown in the labor market. After a long streak of constantly increasing rates of employment, March marked the first month whose job growth did not make the 200,000 benchmark. During the last year, this standard has been typically considered as consistent with a strengthening in the job market.
March showed positive trending in some categories, such as health care, professional and business services, retail trade; there were, however, some sectors that recorded lost jobs, including manufacturing, mining, and construction.
From the beginning of 2015, oil prices have been the cause of a sudden drop of 30,000 jobs from the mining and logging industry, including oil and gas extraction. Last month, construction and manufacturing industries have both lost 1,000 jobs each.
There have been varied reasons for which the job market has seen such a slowdown, which was reflected in the weak economic growth; some blamed the severe winter we are still facing; others believe the strengthening dollar and inventory adjustments are also responsible.
According to David Stockton, senior agent at the Peterson Institute for International Economics, economic activity for the near future presents some evident weakness. If such data becomes true, labor market might register further stalling in improvement.
In the matter of pay raise for U.S. workers, any growth remained modest. The meager raise of 7 cents of the average hourly pay suggests the labor market is still slacking. Concerned about the latest worse-than-expected job report, the U.S. central bank and the Federal Reserve are presenting extra caution about the start of hiking interest rates.
If the job market continues to improve, Fed Chair Janet Yellen predicts an upgrade in the target range for the federal cash reserve rate to be warranted later this year. According to Stockton, the central bank is expected to wait at least until September before starting to raise interest rates. The reason for such a late move is the desire to receive more data that confirms the U.S. economy is improving.
Yellen stated that waiting until September is a wise move for federal officials, who will know by then if the off-start of 2015 was just a temporary weakness or if it was the sign of a more serious slowdown.
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