The world’s largest economy had to deal with various challenges over the last several years. One option to assess the state of the U.S. economy is to take a look at the unemployment rate.
Let’s take a look at the report released by the Bureau of Labor Statistics. Interestingly, the country’s economy added 236,000 jobs in March. It is worth noting that the unemployment rate declined to 3.5%.
The leisure and hospitality industry was the largest contributor. The industry added 72,000 jobs in March. What about other industries?
Interestingly, temporary help services was the second-largest contributor to job growth in March, with 65,000 workers joining the above-mentioned industry.
What’s interesting, the labor force participation rate also rose in March. One month earlier, the labor force participation rate stood at 62.5%. Interestingly, the average weekly hours worked declined to 34.4 from 34.5.
Over the last six months, the country’s economy has added an average of 334,000 jobs each month.
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Analysts are closely monitoring the situation. They would like to understand how the Federal Reserve could react to the report released by the Bureau of Labor Statistics.
Importantly, forecasts from the Federal Reserve released in March suggested one additional 0.25% rate increase was likely in 2023.
Nonetheless, economists see March's jobs data as beginning a period of slower growth for the local labor market that will sooner or later result in a rise in the unemployment rate.
Let’s not forget that the central bank expects unemployment to rise to 4.5% by the end of 2023.
Recently, data on initial jobless claims as well as private payroll data from ADP, suggested the labor market is cooling.
Importantly, initial claims are regarded as the best real-time indicator of stress in the labor market. Interestingly, it has shown some signs of increasing in the last couple of months.
Furthermore, ADP's report showed there were 145,000 jobs added to the private sector in March, below expectations.
More than 260,000 jobs were added in February. As you can see, there is a huge difference between February and March.
Annual pay rose at a 6.9% rate in March. In the last month of winter, annual pay rose at a 7.2% rate, according to the information provided by ADP.
We need to note that job growth was almost evenly divided between services and goods-producing firms. It is a well-known fact that the U.S. economy is heavily services-oriented. The ADP report showed a gain of 75,000 in services and 70,000 in goods producers.
In March, leisure and hospitality added another 98,000 employees, trade, transportation, and utilities added 56,000 employees. Moreover, construction grew by 53,000. Importantly, natural resources and mining also showed a gain, up 47,000. Last but not least, education and health services added 17,000 employees.