U.S. employers added 303,000 jobs in March, far exceeding expectations and demonstrating the continued resistance of the U.S. labor market. Significant job gains were seen in healthcare, reflecting the surging demand from the aging baby boomer population, and leisure and hospitality, where job numbers have finally returned to pre-pandemic levels. Unemployment fell slightly to 3.8%. Year-over-year wage growth rose to 4.1%.
The Numbers
303,000: U.S. employers added 303,000 jobs in March.
3.8%: The unemployment rate fell to 3.8%.
4.1%: Wages rose 4.1% over the past year.
The Good
U.S. employers added 303,000 jobs in March, far exceeding expectations and demonstrating the continued resilience of the U.S. labor market. Thus far, 2024 average monthly job gains have exceeded those prior to the pandemic. According to MarketWatch, the strength of the labor market is causing some economists to reconsider their predictions of an economic slowdown. As noted by the New York Times, the March report shows remarkable improvement from this time last year, when most financial analysts predicted a recession was just months away. There has also been an increase in labor participation, which the Fed and many economists attribute in part to immigration, which should help sustain strong job growth and maintain a balance between labor supply and demand.
The Bad
Growth in year-over-year average hourly earnings slowed to 4.1%, down from 4.3% in February, the slowest annual pace since June 2021. While job growth remains strong, it has been concentrated in a few sectors, with two-thirds of this month’s gains falling within leisure and hospitality, healthcare and government. While job growth accelerates in some industries, rate-sensitive sectors like manufacturing, warehousing and transportation and financial services appear to remain cautious about hiring as they wait on anticipated rate cuts by the Fed. According to the New York Times, other economic indicators show Americans might be feeling the pinch of continued high prices and interest rates. Consumers are pulling back on discretionary spending and more borrowers have been falling behind on credit card and loan payments.
The Unknown
This “eye-popping” report has experts guessing about what it means for interest rates. As reported by CNN, according to projections from their meeting last month, most Fed officials expect to cut rates at least three times this year. But with inflation above the Fed’s 2% target and all signs pointing to an incredibly strong labor market, the timing of those cuts remains uncertain. As reported by the Wall Street Journal, Fed Chair Jerome Powell and other officials have suggested that inflation data over the coming months will be more important in determining the timing of cuts. The consistent message from the Federal Reserve has been that more time is needed to see how the data unfolds—the March report is unlikely to alter their “wait-and-see” approach.
Conclusion
Many have found little to criticize in the better-than-expected March jobs report, with hiring, total employment, participation and weekly earnings all exceeding expectations. But Americans are still facing the reality of stubborn inflation and sustained rate increases and there’s little urgency among the Fed to lower rates anytime soon.