US non-farm payrolls rise by 236,000 in March

Hiring in the US slowed further during the previous month, rising at its slowest pace since December 2020.

According to the U.S. Department of Labor, non-farm payrolls increased by 236,000 in March, following a 311,000 gain in February.

Economists had penciled in an increase of 230,000.

Average hourly earnings meanwhile rose by 0.3% month-on-month, as expected, following a 0.2% increase in February.

In year-on-year terms, average hourly earnings were up by 4.2%, near a two-year low of 4.2%.

That was "not far above levels consistent with the Fed's 2.0% inflation target and the surveys suggest it will slow further", said Andrew Hunter, deputy chief US economist at Capital Economics.

Hunter also pointed out that the failure of U.S. lender SVB on 10 March came towards the end of the payroll survey period, so "the employment report was never likely to show much of an immediate hit, with payrolls in the financial sector falling by a trivial 1,000."

Private sector hiring slowed from 266,000 person pace in Ferbuary to 189,000, while in government payrolls increased by 47,000 after a 60,000 rise.

Hiring in Leisure and Hospitality grew by 72,000, a similar pace to the previous few months, but fell in Construction, Mining, Retail and Temporary Help Services.

The unemployment rate, which is derived from a different survey to the one that generates the non-farm payrolls, dipped from 3.6% in February to 3.5%.

Driving the improvement was a 577,000 person increase in employment with the labour force participation rate rising from 62.5% to 62.6%.

"Overall, the report is a mixed bag as far as the May FOMC meeting goes and the decision is likely to come down to the data next week, most notably the March CPI report," Hunter said.

"Whether or not the Fed squeezes in a final 25bp rate hike next month, we still think they will be cutting again later this year as the economy falls into recession."

Ian Shepherdson, chief economist at Pantheon Macroeconomics, chipped in saying: "The March employment data alone are nothing like weak enough to persuade the Fed to leave rates on hold in May [...] a continued surge in jobless claims, soft core retail sales numbers, and - most importantly - good CPI, PPI, and PCE numbers over the next few weeks could yet prevent another rate hike."