Payroll growth weakened significantly last month amid harsher winter weather as employers added 98.000 jobs in a sharper pullback than anticipated.
The unemployment rate, which is calculated from a different survey, fell to 4.5% from 4.7%, the Labor Department said Friday.
Economists surveyed by Bloomberg projected 180,000 employment gains, based on their median estimate.
Analysts expected some payback in March after unseasonably mild temperatures pulled forward hiring to early in the year, especially in sectors such as construction, resulting in 200,000-plus job gains in January and February. And a snowstorm that slammed into the Midwest and East Coast in mid-March likely further curtailed job growth, says economist Jim O’Sullivan of High Frequency Economics..
Before the report was released, Goldman Sachs estimated the weather effects could drag down payroll gains by as much as 30,000 to 60,000.
But some economists also have said the outsize job gains early this year defied a low unemployment rate that’s supplying businesses a shrinking pool of available workers. Many analysts expect that trend ultimately to result in average monthly job gains of about 170,000 this year, down from 187,000 last year and 226,000 in 2015.
Some other labor indicators seemed to signal continued strong job gains last month. Payroll processor ADP estimated that businesses added a booming 298,000 jobs. And an index of hiring in manufacturing climbed to its highest level in nearly six years.
At the same time, a measure of hiring in the service sector, which makes up about 80% of the economy, fell sharply. Initial jobless claims, a barometer of layoffs rose steadily through the month.
Strong employment gains and a falling unemployment rate from March through May could convince the Federal Reserve to raise interest rates again in June, following two hikes since December.