Total nonfarm payroll employment rose by 916,000 in March, while the unemployment rate receded to 6.0%, the U.S. Bureau of Labor Statistics reported.
It’s a big step forward for the labor market, reflecting the ongoing renewal of economic activity as the country continues to pick itself back up from the COVID-19 crisis. March’s growth rate is the fastest since the summer, and the number of jobs added was the most since 1.58 million were added in August.
The hiring surge shattered expectations, with economists expecting a consensus of around 675,000 new jobs. With virus-related restrictions continuing to ease and more and more people getting vaccinated, job growth was widespread, noted Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association.
“Job growth accelerated sharply in March, with gains across a number of sectors, including both goods-producing and service-providing industries,” Fratantoni said. Gains were largest in leisure and hospitality, which added 280,000 jobs, nearly two-thirds of which came via hiring by food and drink establishments. And with the resumption of in-person learning in many places, employment grew in both private and public education. Local government education added 76,000 jobs, state government education added 50,000, and private education added 64,000.
Progress was also seen in many blue-collar sectors. Manufacturing, for example, added 53,000 jobs, most in six months. And construction added 110,000 jobs, more than reversing the likely weather-related decrease from the month prior. Residential construction jobs, in particular, have been trending upward over the past few months, with March seeing a gain of more than 10,000 jobs in the sector.
That’s good news for the housing market, Fratantoni said, as inventory levels remain precariously low.
“From a housing market perspective, it was good to see the 110,000 gain in construction jobs,” he said. “There is a desperate lack of inventory in the housing market right now, which is driving up home prices at an unsustainably rapid pace. Total construction employment remains 182,000 below its February 2020 level.
“With the job growth and bright outlook for the remainder of the year, housing demand will remain quite strong, even if mortgage rates increase above 3.5%, as we expect.”
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It’s worth noting that the labor market still has a ways to go before its recovery can be declared in earnest. The country is still at a loss of 8.4 million jobs compared to February, and even sectors which have seen big bounce-backs of late are far below their pre-pandemic numbers. Employment within leisure and hospitality, for instance, remains down by 3.1 million (some 18.5%) since February 2020. And the labor recovery remains uneven, with notable disparities in the rebound among racial, gender, and wage tier demographics.
“There are still more than 4.2 million people who have been actively looking for work for more than 6 months, and total employment remains 5.5% below the February 2020 peak,” Fratantoni said. “Although the job market is certainly recovering quickly, the stimulus payments and renter and homeowner relief that were part of the American Rescue Plan will provide support for struggling individuals who are unemployed or underemployed, including the 2.5 million homeowners currently in forbearance plans.”
Still, the big March improvement is a very encouraging sign, with the MBA expecting the strong month to serve as a herald for further stout labor gains. Fratantoni said that the group anticipates the jobless rate to be “well below 5%” by the end of the year.
Wells Fargo analysts echoed Fratantoni’s sentiments, citing the “recent deployment of more fiscal support, easing restrictions and rising optimism.” The number of people who have permanently lost jobs has stayed at about half the level seen during the Great Recession, with temporarily laid off workers still comprising a significant share (20.8%) of those who have lost jobs.
Labor force participation, Wells Fargo added, should continue to increase with the broadening demand for workers, helped also by vaccination efforts and the continued return to in-person learning. The metric saw little change in March at 61.5%.
