03:24 - Source: CNN Business
Why are experts talking about low unemployment like it's a bad thing?!
Washington, DC CNN  — 

The latest monthly jobs report showed that US hiring slowed in March but remained robust, with gains in service-providing businesses like bars and restaurants, but weakness in construction and manufacturing.

Leisure and hospitality fueled last month’s growth in payrolls, a trend that has held firm since the economy started its recovery from the pandemic. Government employers and the professional and business services industry also hired at a solid clip last month. But employment shrank in construction, manufacturing, and nondurable goods.

Here’s a look at where employment grew last month and where it shrank, according to the Bureau of Labor Statistics’ report.

Strongest gains

Leisure and hospitality employers added 72,000 jobs last month, the most of any industry. But the sector is still 2.2% below pre-pandemic staffing levels and added a smaller-than-average number of jobs in March than in the six prior months.

“The gains we continue to see in health care and leisure and hospitality are because those industries are still trying to recoup earlier losses,” said Diane Swonk, chief economist at KPMG. “So, the services sector held up but showed some signs of cooling.”

Government employers added 47,000 jobs in March, led by hiring from state and local governments, which typically struggle to add workers in a tight labor market. Health care businesses added 34,000 jobs and employment in the business services sector — which includes many white-collar jobs such as accountants, engineers, and consultants — grew by 39,000. Government jobs also remain 314,000, or almost 1.4%, below their pre-pandemic level.

Some weakness

Cracks are beginning to form in the goods-production part of the labor market, however. The construction industry lost 9,000 jobs in March, the first decline in construction employment in more than a year and the largest job loss in the sector since May 2021 -— though still a drop of just under 1.1%.

Demand for housing tanked at the end of last year when aggressive rate hikes from the Federal Reserve pushed up borrowing costs for home buyers. But while new residential construction has slowed over the past year, construction jobs have held up, mostly because of a backlog in construction projects, Swonk said. She added that the March decline in construction employment is attributed to weak demand for housing and “unusually harsh spring weather.”

One other casualty of the Fed’s rate hikes is manufacturing, which also lost jobs last month, according to the BLS.

“Manufacturing is one of the most interest-rate sensitive industries, as much as technology and financial services, so it’s not surprising to see the job losses there,” said Sinem Buber, lead economist at ZipRecruiter.

View this interactive content on CNN.com

Data from the Institute for Supply Management released this week showed that the manufacturing sector contracted in March for the fifth month in a row. The survey’s index fell to its lowest level since May 2020.

The nondurable goods industry also saw a pullback in hiring, which was likely due to weaker consumer demand for clothes and household products, Buber added.

“Those goods are a bit more responsive to any changes in the market, and that’s why we’re seeing that industry respond faster than durable goods,” Buber said.

Temporary jobs also declined by nearly 11,000 in March, which could be an indicator that the labor market is going to soften further in the coming months, according to Beth Ann Bovino, US chief economist at S&P Global.

“If you start to see a reduction in temporary hires, that usually means that businesses are seeing some softness in the revenue stream, which is one of the first signs of an easing in the jobs market,” Bovino said.