While the number of jobs added in the U.S. slowed dramatically during March, trucking supplied a big part of the gain, according to Labor Department figures released Friday, helping push the unemployment rate almost down to a 10-year low.
Overall, 98,000 jobs non-farm jobs were added during the month, less than expected from a consensus estimate from analysts and far below February’s revised addition of 219,000.
March employment growth occurred in professional and business services, with 56,000 job additions, as well as in mining with 11,000 job gains. Retail trade lost 30,000 jobs as many large chain stores are closing locations.
Trucking added 4,700 jobs during March. The wider transportation and warehousing sector saw a smaller gain of 3,500, due to a decline in the courier and messengers and transit and ground passenger transportation categories.
Even with these small changes, the unemployment rate fell 0.2 of a percentage point to 4.5%, the lowest rate since May 2007. The decline was driven entirely by more workers finding employment while the participation rate held steady, according to Wells Fargo Securities.
The report also showed average hourly earnings during March for all employees on private nonfarm payrolls increased by 5 cents to $26.14, following a 7-cent increase in February. Over the year, average hourly earnings have risen by 68 cents, or 2.7%, the same annual rate as inflation, according to February figures released last month.
The report may be more indicative of U.S. labor markets approaching capacity limits rather than a sign of weakening in labor demand, according to Paul Ferley, assistant chief economist at RBC Economic Research.
“Indications of tightening labor markets were clearly conveyed by the unemployment rate unexpectedly dropping [while] wage growth continues to trend higher,” he said. “Though job growth may be moving towards a more moderate pace, higher wages should keep incomes rising to sustain gross domestic product growth close to the economy’s potential rate.”
In contrast, "the more optimistic market participants will focus on the decline in the jobless rate as evidence that labor market conditions are getting back to ‘normal,'” contended Lindsey Piegza, chief economist at Stifel Fixed Income.
“Those that are less willing to wear the proverbial rose-colored glasses, however, will see that while a declining pool of available labor has made it more challenging for businesses to hire, wage pressures remain modest at best, supported in good part by particular industries where specific skills are in high demand and low supply,” she said.
No matter which details one chooses to home in on, Piegza said, there is no denying a sizable pullback in headline job creation, with first-quarter hiring averaging just 178,000 per month. In 2014, the labor market was creating jobs at a 250,000 monthly pace. By 2015 that slowed to 226,000, and in 2016 that declined even further to 187,000.
“At present, 2017 employment, while still positive, appears to be continuing the declining trend of the past two years,” she said.