U.S. employers provided another batch of jobs in March, adding 303,000 workers to their payrolls and raising hopes that the economy can beat inflation without succumbing to a recession in the face of rising interest rates.
Job growth last month rose from a revised 270,000 jobs in February and was well above the 200,000 jobs economists had expected. By all accounts, this was a significant surge in hiring and reflected the economy's ability to withstand pressures from higher borrowing costs resulting from the Fed's interest rate hikes. As the country's consumers continue to spend, many employers have continued to hire to meet steady customer demand.
Friday's report from the Labor Department also showed that the unemployment rate fell from 3.9% to 3.8%. The unemployment rate has now remained below 4% for 26 straight months, the longest such period since the 1960s. The government also revised its job growth estimates in January and February by 22,000 jobs.
Normally, a huge bounty of new jobs would raise concerns that a vibrant labor market would force companies to raise wages sharply in order to attract and retain workers, thus increasing inflationary pressures. But the March jobs report showed that wage growth moderated last month, which may allay any such concerns.
Average hourly wages rose 4.1% from the previous year, the smallest year-over-year increase since mid-2021. From February to March, hourly wages rose 0.3% after a 0.2% increase the previous month.
The economy is sure to weigh on Americans' minds as the November presidential election approaches and they evaluate President Biden's re-election bid. Many people are still feeling pressured by the surge in inflation that erupted in the spring of 2021. Eleven interest rate increases by the Federal Reserve have helped push inflation down from its peak. But average prices are still about 18% higher than they were in February 2021 — a fact that Biden may pay a political price for.
However, Biden said in a statement on Friday that the economy's strong performance means his policies are paying off.
“My plan is to grow the economy from the middle out and from the bottom up, investing in all Americans and giving the middle class a fair shot,” he said. “Inflation has decreased significantly. We have come a long way, but I will not stop fighting for hardworking families.
The 303,000 jobs added by the economy in March was the largest increase since May. They also boosted average monthly job growth so far this year to a strong level of 276,000 jobs, an improvement even from 2023's strong average of 251,000 jobs.
The unemployment rate fell last month despite 469,000 people entering the labor force in search of work. This influx increased the percentage of Americans who have or are looking for a job from 62.5% in February to 62.7%. A larger workforce tends to reduce the pressure on companies to raise wages significantly, thus alleviating inflationary pressures.
Although most industries added jobs last month, hiring was mainly concentrated in three categories. Healthcare, special education, entertainment, hospitality, and government accounted for approximately 69% of employment. In addition, construction companies added 39,000 jobs.
Four years after the pandemic restricted travel and forced the closure of restaurants, bars and entertainment venues, these industries have finally regained their pre-pandemic employment level, with a category that includes such businesses adding 49,000 jobs in March.
Fed policymakers track the state of the economy, labor market and inflation to determine when to start cutting interest rates from multi-decade highs. Lowering interest rates by the Fed will, over time, likely reduce borrowing rates throughout the economy.
Central bank policymakers began raising interest rates two years ago to try to tame inflation, which by mid-2022 was reaching its highest level in four decades. These interest rate increases – 11 of them from March 2022 through July 2023 – helped slow inflation significantly. Consumer prices rose 3.2% in February from a year earlier, well below the peak of 9.1% recorded in June 2022.
Weisman writes for the Associated Press. AP Economic Writer Christopher Rugaber contributed to this report.
