March’s jobs report painted a picture of a labor market that continues to flout expectations, with nonfarm employers adding 303,000 jobs during the month.
The most recent data from the U.S. Bureau of Labor Statistics revealed gains that far eclipsed the 200,000 jobs predicted by economists polled by Reuters. The unemployment rate, meanwhile, backtracked to 3.8% from 3.9% in February.
Job growth from the prior month were downwardly revised by a modest margin, bringing the initially reported 275,000 February gains to 270,000. Still, the three-month average of annualized additions came in at 276,333 during the first quarter — strongest in a year. Last year, for context, the average monthly gain was just above 251,000.
Health care topped all major sectors in job growth, adding 72,000 jobs in March. Government wasn’t far behind, adding 71,000 during the month, while leisure and hospitality grew by 49,000 jobs and construction added 39,000.
The labor market has now added jobs for 39 straight months, the fifth longest streak ever. And the unemployment rate has stayed under 4% for 26 consecutive months, longest since the 1960s.
Overall, March’s numbers offer an interesting result, one that will no doubt factor into the Federal Reserve’s decision making as it decides when to ultimately kick off a lowering cycle after five straight months of holding steady on its benchmark interest rate. Jobs reports from the past few months had indicated a labor market that, while cooling, remained defiantly healthy, and the latest one is no exception.
The strength of the labor market, according to Wells Fargo economists Sarah House and Michael Pugliese, “suggests the [Federal Reserve] can continue to await further improvement on the inflation front before easing policy” — not great news for a real estate market that’s eager to see the rate movement needle point firmly south.
“Investors may see another strong jobs report as further evidence that rate cuts may not be imminent,” said Odeta Kushi, deputy chief economist at First American Financial Corp. “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.”
There was one tidbit of “good” news for Fed watchers: Average hourly earnings grew modestly in March, ending the month up 0.3%. But year over year, wage growth has fallen to 4.1%. That’s down from 4.3% in February, nearing a three-year trough and suggesting that inflationary pressures from the job market are still easing.
