Job creation in March easily exceeded expectations in a sign that a crowded and flexible labor market continues to accelerate.
Nonfarm payrolls rose by 303,000 during the month, well above Dow Jones estimates for a gain of 200,000 and higher than the downwardly revised gain of 270,000 in February, the Labor Department's Bureau of Labor Statistics reported Friday.
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.
Job growth came from many of the usual sectors that have fueled 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.
“This is another really 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 sign.”
Despite the decline in the broader unemployment level, the black unemployment rate rose to 6.4%, an increase of 0.8 percentage points, reaching the highest level since August 2022. Rates for Asians and Latinos fell sharply to 2.5% and 4.5%, respectively. .
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 will release the Consumer Price Index reading for March.
Despite a string of positive gains that have kept the unemployment rate below 4% since January 2022, 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.
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