Despite concerns earlier in the year over the outlook for the US economy, there was a high level of job growth reported earlier in the year, with around 517,000 jobs added and an unemployment rate of 3.4%, the lowest the country has seen since 1969.
The US Labor Department has now announced that the trend of low unemployment has continued, but new job creation has started to slow. It recorded that there were an additional 236,000 jobs added to the economy in March, which was lower than the previous month.
However, the department noted that the number was similar to its expectations and the economy has remained resilient, despite a sharp rise in borrowing costs in the last few months. The US central bank has recently increased interest rates to stabilize food and energy bills.
Even though higher interest rates typically mean less job creation as businesses borrow less money, the unemployment rate was still at a historic low of 3.5% throughout March and employers have added an average of 330,000 jobs each month in the last six months.
In an interview with the BBC, Andrew Hunter, deputy chief US economist for Capital Economics.”Overall, while the headline gain was a little stronger than we had expected, it’s still the smallest monthly gain since December 2020″.
But, Ian Shepherdson, chief economist at Pantheon Macroeconomics, warned that the latest report of job growth was simply the “calm before the slump” and that the collapse of Signature Bank and Silicon Valley Bank could lead to a sharp drop in hiring.
He added: “The March data effectively are a look back into the pre-SVB world. But the hit from tighter credit conditions is coming …. We expect unemployment to rise markedly across the remainder of this year.”
At the moment, the number of job vacancies is higher than the number of available workers, but analysts believe this could change, and some sectors have already seen a decline.
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