Roughly 303,000 jobs were added to the U.S. economy in March – above expectations and far higher than the average monthly gain of 231,000 over the prior 12 months – while the unemployment rate remained flat at 3.8%, according to the U.S. Bureau of Labor Statistics.
The highest job gains occurred in health care, government, and construction.
About 6.4 million people were unemployed as of the end of the month – basically flat compared with February.
The unemployment rate has been in a narrow range of 3.7% to 3.9% since August 2023, the BLS notes.
The number of long-term unemployed (those jobless for 27 weeks or more), at 1.2 million, was little changed in March. The long-term unemployed accounted for 19.5% of all unemployed people.
The labor force participation rate, at 62.7%, and the employment-population ratio, at 60.3%, were also little changed.
Wages continued to increase gradually: The average wage for a private nonfarm payroll employee increased by 12 cents, or 0.3%, to $34.69.
Over the past 12 months, average hourly earnings have increased by 4.1%.
In March, average hourly earnings of private-sector production and nonsupervisory employees edged up by 7 cents, or 0.2%, to $29.79.
Because the March jobs report blew away expectations, many are wondering if it will reinforce the Fed’s reluctance to slash the fed funds rate.
“On the surface and under the hood, this was a goldilocks jobs report,” says Odeta Kushi, deputy chief economist for First American, in a statement. “Strong payroll growth, but the growth was non-inflationary – year-over-year wage growth is slowing, labor participation is up.
“A resilient labor market and strong economy, coupled with inflation that remains above the Federal Reserve’s 2 percent target, supports the Fed’s reluctance to cut the federal funds rate,” Kushi adds. “At the end of 2023, the market was expecting that the Fed would cut rates six-to-seven times in 2024. However, with the economy and labor market proving resilient, and inflation remaining stickier than anticipated, the Fed seeks further assurance that inflation is headed sustainably towards its 2 percent target. As a result, expectations for rate cuts have crashed, and the majority expect three or fewer rate cuts this year.
“With the market believing that rates will stay ‘higher for longer,’ mortgage rate expectations have drifted higher for 2024,” Kushi says. “Fannie Mae, for example, is now expecting 30-year mortgage rates to finish 2024 at 6.4 percent, compared to an earlier forecast of 5.8 percent.”
Photo: Marten Bjork