US job growth slows some in March, unemployment still low

In March, job growth in the U.S. economy slowed somewhat from the prior two months, even as unemployment remained at historical lows.

Data from the U.S. Bureau of Labor Statistics for March 2023 showed the following:

The U.S. economy added 236,000 new jobs in March. The pace of job gains is slowing so far in 2023. The March total is below the 311,000 positions gained in February, and 504,000 added in January. It is also below the six-month average monthly gain of 334,000.

Retail jobs showed little change, as the sector lost 15,000 jobs. Even as furniture, electronics and appliances showed some losses, department stores continue to be a gainer, adding 15,000 jobs.

Unemployment edged down to 3.5%, falling only slightly from 3.6% in March. The unemployment rate continues to be little changed this year.

Average hourly earnings rose by 9 cents, or 0.3%, to $33.18. This brings the 12-month wage increase to 4.2%.

What it means for brands and retailers: The job market remains a key indicator of demand, and overall it is still rolling along. While there was a slowdown in job growth on the month, there are still signs of strength throughout the labor market. Unemployment is low, wages are rising and employers are still in fact adding jobs. On the whole, the report tells retail leaders that consumers will have confidence to continue spending, just as they have in past months. While inflation is causing consumers to make choices about what they buy, overall they are still shopping.

What it means for the Fed: This is where it starts to get tricky. The Federal Reserve has watched the job market remain hot as inflation continued to tick up, and it raised interest rates to tamp down demand in an effort to get inflation under control. This jobs report shows that there is some cooling happening, which the Fed would expect after such aggressive interest rate hikes. That shows up in the slowdown to job growth. But there are no signs that unemployment is ticking up, even as many members of the Fed’s key committee have projected that number will rise at some point this year. On balance, the job market is still strong. So the Fed will be watching closely to see whether inflation comes down in next week’s Consumer Price Index, even as the job market is still mostly robust. That could go a long way toward informing the size of the rate increase when the committee meets May 2-3, even as the Fed must now also factor in the fallout from the banking crisis wrought by the collapse of Silicon Valley Bank.