WASHINGTON, (Reuters) - The U.S. economy created the fewest jobs in six months in March as the boost from mild temperatures faded, but a pickup in wage gains pointed to a tightening labor market, which should allow the Federal Reserve to raise interest rates further this year.
Nonfarm payrolls increased by 103,000 last month as construction and retail sectors shed jobs, the Labor Department said on Friday. That was the smallest amount since September and followed a 326,000 surge in February.
Temperatures returned to normal in March, with some snowstorms. Job growth is also moderating as the labor market hits full employment. There has been an increase in reports of employers, especially in the construction and manufacturing sectors, struggling to find qualified workers.
March’s job growth was below the 202,000 average of the past three months and close to the roughly 100,000 jobs per month needed to keep up with growth in the working-age population.
The unemployment rate held steady at 4.1 percent for a sixth straight month, even as people left the labor force.
Economists polled by Reuters had forecast the economy adding 193,000 jobs last month and the unemployment rate dropping to 4.0 percent.
With labor market slack diminishing, wage growth picked up a bit in March. Average hourly earnings rose eight cents or 0.3 percent last month after edging up 0.1 percent in February. The gain lifted the annual increase in average hourly earnings to 2.7 percent from 2.6 percent in February.
Economists say annual wage growth of at least 3 percent is needed to lift inflation toward the Fed’s 2 percent target. There is hope that wage growth will accelerate in the