Jobs report March 2023:

Nonfarm payrolls rose about in line with expectations in March as the labor market showed increased signs of slowing.

The Labor Department reported Friday that payrolls grew by 236,000 for the month, compared to the Dow Jones estimate for 238,000 and below the upwardly revised 326,000 in February.

The unemployment rate ticked lower to 3.5%, against expectations that it would hold at 3.6%, with the decrease coming as labor force participation increased to its highest level since before the Covid pandemic.

Though it was close to what economists had expected, the total was the lowest monthly gain since December 2020 and comes amid efforts from the Federal Reserve to slow labor demand in order to cool inflation.

Along with the payroll gains came a 0.3% increase in average hourly earnings, pushing the 12-month increase to 4.2%, the lowest level since June 2021. The average work week edged lower to 34.4 hours.

“Everything is moving in the right direction,” said Julia Pollak, chief economist for ZipRecruiter. “I have never seen a report align with expectations as much today’s over the last two years.”

Leisure and hospitality led sectors with growth of 72,000 jobs, below the 95,000 pace of the past six months. Government (47,000), professional and business services (39,000) and health care (34,000) also posted solid increases. Retail saw a loss of 15,000 positions.

The report comes amid a bevy of signs that job creation is on wane.

In separate reports this week, companies reported that layoffs surged in March, up nearly 400% from a year ago, while jobless claims were elevated and private payroll growth also appeared to slow. The Labor Department also had reported that job openings fell below 10 million in February for the first time in nearly two years.

That all has followed a year-long Fed campaign to loosen up what had been a historically tight labor market. The central bank has boosted its benchmark borrowing rate by 4.75 percentage points, the quickest tightening cycle since the early 1980s and an effort to bring down spiraling inflation.

Several Fed officials said this week they remain committed to the inflation fight and see interest rates staying elevated at least in the near term. Market pricing shifted following Friday’s report, with traders now expecting the Fed to implement one last quarter percentage point hike in May.

Investors worry that the Fed move are likely to result in at least a shallow recession, something the bond market has been pointing to since mid-2022.

In its most recent calculation, through the end of March, the New York Fed said the spread between 3-month and 10-year Treasurys are indicating about a 58% probability of recession in the next 12 months. The Atlanta Fed’s GDP tracker is indicating growth of just 1.5% in the first quarter, after pointing to a gain of as much as 3.5% just two weeks ago.

This is breaking news. Please check back here for updates.