US added 431,000 jobs in March in sign of economic health

By PAUL WISEMAN – AP Economics Writer

America’s employers expanded a range of robust jobs in March, adding 431,000 jobs as a sign of the economy’s resilience to a still-destructive pandemic and the highest inflation in 40 years.

The Labor Department’s report on Friday showed that last month’s job growth helped reduce unemployment to 3.6%, the lowest level since the pandemic broke out two years ago.

Despite rising inflation, persistent supply bottlenecks, the damaging effects of covid-19 and now a war in Europe, employers have added at least 400,000 jobs for 11 months in a row.

Inflation may begin to weaken consumption, the main driver of the economy. The Americans increased their spending by only 0.2% in February, down from a much larger increase in January.

Nevertheless, the labor market has continued to recover at an unexpected rate from the recession in the coronavirus. The number of job vacancies is at an almost record level and applications for unemployment benefits have fallen to near their lowest level since 1969.

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The still-stable U.S. labor market reflects a robust recovery from the short but devastating recession in the coronavirus, which wiped out 22 million jobs in March and April 2020 when companies shut down or reduced hours and Americans stayed home to avoid infection.

But the recovery has gone fast. With generous federal support, pandemic savings and ultra-low lending rates designed by the Federal Reserve, U.S. consumers have spent so fast that many factories, warehouses, shipping companies and ports have failed to keep pace with customer demand. The supply chains have grumbled and forced up prices.

When the pandemic has eased, consumers have broadened their spending beyond goods to services, such as health care, travel and entertainment, which they had long avoided during the worst pandemic. The result: Chronically high inflation causes difficulties for many households with lower incomes who are facing sharp price increases for necessities such as food, petrol and rent.

It is unclear whether the economy can keep pace over the past year. The state aid controls are gone. The Fed raised its short-term reference rate two weeks ago and is likely to continue raising it well into next year. These rate hikes will result in more expensive loans for many consumers and businesses.

Inflation has also eroded consumers’ purchasing power: Hourly wages, adjusted for higher consumer prices, fell by 2.6% in February from a year earlier – the eleventh month in a row that inflation has outpaced wage growth from year to year. According to AAA, the average gasoline price, at $ 4.23 per gallon, is up by a staggering 47% from a year ago.

Under pressure from inflation, some consumers reduce their spending. The Ministry of Trade reported on Thursday that consumption expenditure rose by only 0.2 %% in February – and fell by 0.4% adjusted for inflation – from an increase of 2.7% in January.

Nevertheless, the labor market has continued to accelerate. Employers posted nearly a record 11.3 million jobs in February. Nearly 4.4 million Americans quit their jobs, a sign of confidence that they could find something better.

Despite this, so many jobs were lost in 2020 that the economy is still more than 2 million shy of the number it had just before the pandemic struck. Over the past year, employers have added an average of 556,000 jobs a month. At that rate – no guarantee of continuation – the nation would recover all jobs lost due to the pandemic in June. (This would still not include all additional employment that would have been done in the last two years under normal circumstances.)

Brighter job prospects are beginning to draw back to the workforce people who had been sidelined due to health problems, difficulties finding or affording daycare, generous unemployment benefits that have now expired or other reasons.

In the past year, 3.6 million people have joined the US workforce, which means that they now either have a job or are looking for one. But their ranks are still almost 600,000 smaller than where they were in February 2020, just before the pandemic hit the economy.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, transmitted, rewritten or redistributed without permission.

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