June 24, 2022

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U.S. labor market powers ahead; unemployment rate drops to 3.6%

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WASHINGTON — U.S. employers maintained a brisk pace of hiring in March, driving the unemployment rate to a new two-year low of 3.6% while also boosting wages, resulting in a further tightening of labor market conditions and opening the door to a hefty 50 basis points interest rate hike from the Federal Reserve in May.

The Labor Department’s closely watched employment report on Friday also showed more people joining the workforce, likely attracted by the higher wages. Employment in professional and business services, financial activities and retail sectors is now above pre-pandemic levels.

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The run of robust job gains underscored the economy’s resilience even as growth appears to have slowed considerably in the first quarter under the weight of high inflation.

“Despite concerns about inflation and the Russia-Ukraine war, American businesses are still hiring at full throttle, while more people are returning to the labor force,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.

“That’s great news for the economy. However, the labor market is only getting tighter and wages are on a clear upward track, fanning the inflation flames. The Fed has every reason to go big or go home on May 4.”

The survey of establishments showed that nonfarm payrolls increased by 431,000 jobs last month. The economy created 95,000 more jobs in January and February than initially estimated.

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Overall employment is now 1.6 million jobs below its pre-pandemic level, with many economists predicting all the…

Reuters

2022-04-01 12:20:57

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