Washington (Reuters) – U.S. employers added the fewest number of workers in 10 months in March, but a drop in the unemployment rate to a near 10-year low of 4.5% pointed to a labor market that continues to tighten.
Nonfarm payrolls increased by 98,000 jobs last month as the retail sector shed employment for a second-straight month, the Labor Department said on Friday, the fewest since last May.
The economy enjoyed job gains in excess of 200,000 in January and February as unusually warm temperatures pulled forward hiring in weather-sensitive sectors like construction, leisure and hospitality.
Weather A Factor In March
In March, temperatures dropped and a storm lashed the Northeast.
The unemployment rate fell two-tenths of a percentage point to 4.5%, the lowest level since May 2007. Economists polled by Reuters had forecast payrolls increasing 180,000 last month and the unemployment rate unchanged at 4.7%.
The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population. The labor market is expected to hit full employment this year, which could drive faster wage growth.
The weak payrolls gain could raise concerns about the economy's health especially given signs that gross domestic product slowed to around a 1.0% annualized growth pace in the first quarter after rising at a 2.1% rate in the fourth quarter.