In the latest sign that the U.S. economy is maintaining its gravity-defying momentum, the Bureau of Labor Statistics reported Friday that employers added 303,000 jobs in March, smashing expectations of about 200,000 for the month. Analysts also revised job growth for the previous two months upward by 22,000.
The unemployment rate dropped to 3.8%, down from 3.9% in February, hovering near a 50-year low. The jobless rate fell even though 469,000 people entered the labor force looking for work, raising the labor force participation rate from 62.5% to 62.7%.
Wages continued to grow at a solid clip, with average hourly earnings rising 0.3% from February to March, and up 4.1% on a year-on-year basis, providing a real increase even after discounting for inflation. And employment in the leisure and hospitality sector finally returned to its pre-pandemic level, four years after being crushed by Covid-19.
The White House celebrated the latest in a series of good economic news. “Today’s report marks a milestone in America’s comeback,” President Biden said in a statement. “Three years ago, I inherited an economy on the brink. With today’s report of 303,000 new jobs in March, we have passed the milestone of 15 million jobs created since I took office.”
What the experts are saying: Neil Irwin of Axios marveled at the latest snapshot of the economy. “If you went into a lab and tried to design the perfect jobs report, you’d have a hard time coming up with something better than the one the Labor Department issued Friday at 8:30am ET,” he wrote.
Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance, said the report erases any concerns about a slowing economy. “This morning’s blowout jobs numbers show that the economy isn’t showing any signs of slowing down,” he wrote. Sal Guatieri, senior economist at BMO Capital Markets, said that not only is the job market not weakening, but it may be picking up speed. “The US labor market appears to be strengthening, not slowing,” he wrote in a research note.
Some economists attributed the strong job to higher-than-expected immigration, at least in part. Noting that the labor force participation rate rose, former PIMCO chief Mohamed A. El-Erian said the results were “consistent with the favorable domestic supply side influence that has fueled the current phase of US economic exceptionalism relative to most other advanced countries.”
Former Obama administration economist Jason Furman agreed, saying the latest numbers provide “more evidence that the high job growth is due to high working age population growth.”
What’s the Fed to do? The only wrinkle in the solid jobs report is that it could push the Federal Reserve to delay widely anticipated interest rate cuts. Michael Feroli, chief U.S. economist at JPMorgan Chase, said he thinks the data point to another delay in rate cuts, with Fed officials more likely to move ahead with cuts in July rather than June.
Dallas Fed President Lorie Logan said Friday there are “meaningful risks” that inflation could run closer to 3% than 2%, the central bank’s target rate. Accordingly, it is “much too soon to think about cutting interest rates,” she said.