The United States adds 236,000 jobs in March and unemployment falls to 3.5% but the economy begins to cool

The US economy added 236,000 jobs in March, less than in January (504,000) and February (311,000) and below the experts' forecast (240,000), thus showing the first signs of cooling off after a year of rising prices. interest rates by the Federal Reserve to curb inflation, but despite this the unemployment rate fell from 3.6% to 3.5% according to the Labor Department report published this Friday

The Hispanic unemployment rate decreased to 4.6% in March,

offsetting the previous month's increase.

Unemployment rates for adult men (3.4%), adult women (3.1%), teens (9.8%), whites (3.2%), blacks (5.0%), and Asians (2.8%) barely changed during the month.

Employment continued to increase in the leisure and hospitality, public administration, professional and business services, and healthcare sectors.

Even so, it may still be too high for the Fed, as it may imply that there is still a pace of hiring that puts pressure on wages and costs of production and services, and consequently, prices. 

For more than a year, the Federal Reserve has tried to curb inflation by tightening control over the US economy with nine consecutive interest rate hikes.

A key objective has been to reduce the breakneck pace of contracting to stem rising prices.

So far, these measures have not given a conclusive result.

Hiring was surprisingly

, confounding analysts.

And the unemployment rate remains just slightly above its lowest levels in half a century. 

Construction workers prepare a building foundation in Boston.

Michael Dwyer/AP

Although the latest economic indicators increasingly suggest an economic slowdown is on the horizon: Employers are posting fewer job openings;

more Americans are lining up for unemployment aid;

US trade with the rest of the world is shrinking;

And while restaurants, retailers, and other service businesses continue to grow, they're growing more slowly.

Signs of a slowing economy 

The Institute for Supply Management, an association of purchasing managers, reported Monday that US manufacturing activity contracted in March for the fifth straight month.

Two days later, the ISM said growth in services, which account for the vast majority of employment in the country, had slowed sharply in the past month.

The Commerce Department reported Wednesday that US exports and imports fell in February in another sign that the global economy is weakening.

The Labor Department said Thursday it had adjusted the way it calculates how many Americans file for unemployment benefits.

The adjustment added nearly 100,000 claims to its numbers over the past two weeks and could explain why the big layoffs in the tech industry this year have yet to appear on the jobless rolls.

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It also reported this week that employers posted 9.9 million job openings in February, the fewest posted since May 2021 but still far higher than any record before 2021.

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“Economic data appears to show that the

, reinforcing the hopes of Fed officials that lower demand will somehow reduce inflation,” he said this week in his analysis Christopher Rupkey, chief economist at research firm FWDBONDS LLC. 

A 'Goldilocks' scenario for the Fed

The Federal Reserve has expressed hope that employers will ease wage pressures by posting fewer job openings rather than cutting many existing positions.

He also hopes more Americans will start looking for work, thereby increasing the supply of labor and reducing pressure on employers to raise wages.

The unemployment rate can rise when more people are looking for work and can't find it right away.

This is because only people who are actively looking for work are counted as unemployed.

Rubeela Farooqi, chief US economist at High Frequency Economics, told The Associated Press that “

a modest increase in the unemployment rate, an increase in the civilian labor force , and a slowdown in average hourly earnings would shape a 'Goldilocks' scenario from the Fed's perspective.”

It would indicate, Farooqi said, "that the wage threat to inflation is diminishing."

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On the other hand, he said, a

would suggest the Fed needs to do more to combat inflation.

“We don't really have an accurate way of assessing how the labor market is going to evolve in response to tighter monetary policy,” Farooqi said.

“We have been expecting a relaxation in labor market conditions for some time.

Maybe now it is imminent, ”he indicated. 

A year of fighting inflation

For Fed officials, the main concern is to control inflation.

They were slow to respond after consumer prices began to rise in the spring of 2021, concluding that it was only a temporary consequence of supply bottlenecks caused by the economy's surprisingly explosive rebound from the pandemic recession.

It wasn't until March 2022 that the Fed started raising its benchmark rate.

Then last year, he decided to raise rates more aggressively to attack the worst inflation since.

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And as borrowing costs have risen, inflation has steadily declined.

The most recent year-over-year consumer inflation rate (6%) is well below the 9.1% rate reached last June.

But it is still considerably above the Fed's 2% target.

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What complicates matters is the turmoil in the financial system.

Two big US banks failed in March, and higher rates and tighter credit conditions could further destabilize banks and depress consumer and business borrowing and spending.

The Fed aims to achieve a so-called soft landing: slowing growth enough to control inflation without sending the world's largest economy into recession.

Most economists doubt that it will work;

and forecast a recession later this year.