Slower Job Additions In March Confirm Cooling but Tight Labor Market

Barry Adams
07 Apr, 2023
New York City

Futures of benchmark indexes and Treasury yields advanced after the latest jobs report provided another confirmation of cooling but tight labor market conditions.

U.S. economy added jobs at a slower pace in March, but still above the long-term monthly average of 190,000, suggesting the jobs market is growing at a healthy pace. 

Nonfarm payroll employment report offered another signal to policymakers after two private surveys on private sector job additions and job cuts announcements showed similar cooling trends in the labor market.  

Earlier in the week, another report from the  government showed available jobs declined to a 2-year low.   

Treasury yields rose after the release of the nonfarm employment report showed employers are expanding payrolls despite nine rate hikes over the last year. 

Benchmark index futures traded higher on the hopes that the recent cooling trends in the labor market may convince policymakers to slow or even pause future rate hikes. 

The New York Stock Exchange is closed for Good Friday and regular trading is scheduled to resume on Monday and the bond market close at 12:00 p.m. ET. 

Futures market closed at 9:15 a.m. ET. 

 

Job Growth Slowed In March

The U.S. economy created 236,000 net new jobs as the employers slow hiring amid rising costs and interest rates, the U.S. Bureau of Labor Statistics reported Friday. 

The unemployment rate declined to 3.5% from 3.6% in February. 

The unusually mild weather and seasonal factors drove hiring in the first two months but jobs market growth has been slowing after the surge in January and February. 

Both the unemployment rate, at 3.5%, and the number of unemployed persons, at  5.8 million, changed little in March. 

These measures have shown little net movement  since early 2022.

The U.S. economy added 472,000 new jobs in January and 326,000 in February, significantly higher than the long-term monthly average of less than 190,000. 

The recent trends of job additions linked to travel and hospitality and health care sectors were visible in March. 

Leisure and hospitality added 72,000 jobs,  government  expanded payrolls 47,000, professional and business services increased 39,000 and health care added 34,000.

However, retail trade shrank the labor force by 15,000. 

Average hourly earnings rose 0.3% in March and increased 4.2% on an annual basis and dropped to the lowest level since June 2021. 

 

Indexes & Yields 

The S&P 500 index futures advanced 0.2% and the Nasdaq Composite index added 0.1%.  

The yield on 2-year Treasury notes advanced 12 basis points to 3.95%, 10-year notes increased 7 basis points to 3.35% and 30-year Treasury bonds to 3.58%. 

Crude oil edged up 9 cents to $80.70 a barrel and natural gas declined 14 cents to $2.01 a thermal unit.