| U.S. job growth likely slowed in March as the boost from mild temperatures faded, but the gains were probably more than enough to push the unemployment rate down to 4.0 percent, indicating the labor market continues to tighten.
Nonfarm payrolls probably increased by 193,000 jobs last month, according to a Reuters survey of economists. Payrolls surged 313,000 in February as unusually warm weather saw construction firms hire the most workers since 2007. Temperatures returned to normal in March, with some snowstorms.
“The shift from unseasonably warm weather in February to more seasonably normal temperatures in March will depress job growth, likely in construction, retail, and leisure and hospitality,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.
March’s anticipated job growth would be below the 242,000 average of the past three months. Still, it would be well above the roughly 100,000 jobs per month needed to keep up with growth in the working-age population.
The unemployment rate is forecast to fall 1/10th of a percentage point to 4.0 percent, which would be the lowest level since December 2000 and the first drop in the jobless rate in six months. Despite signs of rapidly diminishing labor market slack, wage growth likely remained moderate in March.
Average hourly earnings are expected to have risen 0.2 percent last month after edging up 0.1 percent in February. The gain would lift the annual increase in average hourly earnings to 2.7 percent from 2.6 percent in February.
Wages remain the weakest link in the tight labor market.
Economists say annual wage growth of at least 3 percent is needed to lift inflation toward the Federal Reserve’s 2 percent target. There is hope that wage growth will accelerate in the second half of the year and allow the Fed to continue raising interest rates.
The Fed increased borrowing costs last month and forecast two more interest rate hikes this year. Economists did not see an impact on hiring in the near-term from a recent stock market selloff, which has caused a tightening in financial conditions.
