US hiring pace weakens with just 126K jobs added in March

The weakening U.S. economy spilled into the job market in March as employers added only 126,000 jobs, the fewest since December 2013, snapping a streak of 12 straight months of gains above 200,000.

The Labor Department said Friday that the unemployment rate remained at 5.5 percent.

Economic growth has been hammered this year by harsh winter weather, factory slowdowns and lackluster construction activity. The manufacturing, construction and government sectors each shed workers, while hiring at restaurants plunged from February.

In addition to reporting the sluggish hiring in March, the government revised down its estimate of job gains in February and January by a combined 69,000.

Wage growth in March remained modest. Average hourly wages rose 7 cents to $24.86 an hour.

Past job growth, along with cheaper gasoline, has yet to significantly boost consumer spending. A continued deceleration in hiring could delay the Federal Reserve from raising interest rates in midyear.

The Fed signaled last month that it would be cautious in raising rates from record lows. The Fed has yet to rule out a June rate hike. But many analysts expect the first increase no earlier than September. In part, that’s because Fed officials have revised down the range of unemployment they view as consistent with a healthy economy to 5 percent-5.2 percent from 5.2 percent-5.5 percent previously.

Chair Janet Yellen has stressed that even when the Fed begins raising rates, it will do so only very gradually.

A Fed rate hike would point to stable growth. But the economy has weakened in the first two months of 2015, in part because of the tough winter.

This year’s job growth has yet to ignite a larger boom in consumer spending. Average hourly wages have risen a tepid 2 percent in the past 12 months. McDonald’s, Wal-Mart, the Gap and other major employers have announced raises for their lowest-paid employees. But those pay raises are staggered and unlikely to fuel faster wage growth.

The N.C. Commerce Department reported last month that the state’s unemployment rate was 5.3 percent in February, unchanged from the prior month. New state-level employment data for March will be released April 21.

In Charlotte, the unemployment rate was 5.7 percent in January, according to the most recent data available. New city employment data for February comes out April 8. Observer reporter Katherine Peralta contributed.

This story was originally published April 3, 2015 at 9:07 AM with the headline "US hiring pace weakens with just 126K jobs added in March."