Job creation in March easily exceeded expectations in a sign that a crowded and flexible labor market continues to accelerate.
The Labor Department's Bureau of Labor Statistics reported Friday that the number of nonfarm payrolls rose by 303,000 during the month, well above the Dow Jones estimate for a gain of 200,000 and higher than the downwardly revised gain of 270,000 in February.
The unemployment rate fell to 3.8%, as expected, although the labor force participation rate rose to 62.7%, an increase of 0.2 percentage points from February. The broader measure, which includes discouraged workers and those holding part-time jobs for economic reasons, was flat at 7.3%.
In a key measure of average hourly earnings, wages rose 0.3% during the month and 4.1% from a year ago, both in line with Wall Street estimates.
Growth came from many of the usual sectors that have consolidated gains in recent months. Healthcare leads with 72,000, followed by government (71,000), entertainment and hospitality (49,000), and construction (39,000). Retail trade contributed 18,000 while the “other services” category added 16,000.
The February revision was only 5,000 fewer, while the January revision raised that total by 27,000 to 256,000, still well below the initial estimate of 353,000.
“This is another strong report,” said Lauren Goodwin, economist and chief market strategist at New York Life Investments. “This report and the February report showed some expansion in terms of job creation, which is a very good indicator.”
Despite the decline in the broader unemployment level, the Black rate rose to 6.4%, an increase of 0.8 percentage points, hitting the highest level since August 2022. The rates for Asians and Latinos fell sharply to 2.5% and 4.5%. respectively.
A series of positive gains has kept the unemployment rate below 4% since January 2022, although there are some signs of cracks. For example, the level of domestic employment has grown only modestly over the past year, while temporary employment has declined sharply.
However, the Household Survey, which is used to calculate the unemployment rate, posted stronger gains in March, increasing by 498,000, more than absorbing the 469,000 increase in the level of the civilian labor force.
Gains were largely for part-time workers in the household survey. The number of full-time workers decreased by 6,000, while the number of part-time workers increased by 691,000. The number of people with multiple jobs increased by 217,000, reaching 5.2% of the total employment level.
Markets are closely monitoring employment data, especially as the Federal Reserve considers its next steps on monetary policy. Stocks fell this week on concerns that a strong labor market and resilient economy could keep the central bank on hold longer than expected.
Stock market futures rose after the report while Treasury yields also added to the gains.
The Fed is looking to guide inflation down to 2% annually, a target that has proven elusive even as the rate of price gains has slowed from its peak in mid-2022. Most measures suggest inflation is above 3%, although the preferred measure is The Fed is below this level.
Market prices are pointing to a first rate cut in June, although several Fed officials, including Chairman Jerome Powell, signaled this week that they favor a cautious, data-driven approach. On Wednesday, the BLS is scheduled to release the Consumer Price Index reading for March.
Correction: The unemployment rate fell to 3.8%. An earlier version missed this step.
