U.S. payrolls rose in March by the most in nearly a year and the unemployment rate dropped, pointing to a strong labor market that’s powering the economy.
Non-farm payrolls advanced 303,000 last month, following a combined 22,000 upward revision to job gains in the prior two months, a Bureau of Labor Statistics (BLS) report showed Friday. The rise exceeded all expectations in a Bloomberg survey of economists.
The unemployment rate fell to 3.8 percent, with more people joining the workforce and able to find a job.
Job growth in March was led by faster hiring in healthcare and construction, as well as leisure and hospitality, which has now bounced back above its pre-pandemic level. A measure of the breadth of job gains increased.
Treasury yields rose and the S&P 500 opened higher, while the dollar advanced. Traders trimmed bets on the odds the Federal Reserve will lower rates in June.
“The U.S. labor market appears to be strengthening, not slowing, and risks delaying Fed easing,” Sal Guatieri, senior economist at BMO Capital Markets, said in a note.
The labor market has been the stalwart of the U.S. economy, giving Americans the wherewithal to keep spending in the face of high prices and high borrowing costs. While Fed officials have flagged moderation in job gains over the past year as a possible precursor to interest rate cuts, Friday’s data may raise questions over the extent of that cooling and its implications for inflation.
An aggregate measure of weekly payrolls—which provides a broader reading of changes in earnings, hours, and employment—rose 0.8 percent, matching the biggest monthly increase since January 2023.
| Metric | Actual | Estimate |
|---|---|---|
| Change in payrolls (month-over-month) | +303,000 | +214,000 |
| Unemployment rate | 3.8% | 3.8% |
| Average hourly earnings (month-over-month) | +0.3% | +0.3% |
Fed Chair Jerome Powell said Wednesday that labor supply and demand have come into better balance, nodding in part to more immigration. Policymakers have stressed they’re in no rush to lower borrowing costs and that incoming data will guide that decision.
Officials will see fresh figures on consumer and producer prices next week, followed by the March reading of their preferred inflation gauge—the personal consumption expenditures (PCE) price index—before their meeting April 30 to May 1.
What Bloomberg Economists Say…
“The headline figures in the March jobs report generally surprised positively, with hiring, total employment, participation, and weekly earnings all exceeding expectations. That boosts the odds that the Fed will remain patient in its inflation fight, further delaying the first rate cut.”
— Stuart Paul, Eliza Winger & Estelle Ou
The jobs report is composed of two surveys: one of businesses that generates the payrolls and wage data, and another smaller one of households used to produce the unemployment rate.
The household survey also publishes its own measure of employment, which surged by nearly a half million in March after declining in the prior three months. Many economists have discounted the recent weakness in this metric, given that other indicators remain strong, such as unemployment claims and consumer spending.
Also in that survey is the labor force participation rate—the share of the population that is working or looking for work—which rose to 62.7 percent, the first advance since November. The rate for workers age 25 to 54 ticked down to 83.4 percent, still near the highest in two decades and also flagged by Powell for helping unwind some of the tightness of the labor market.
Increased participation may also be helping alleviate wage pressures. The survey of establishments showed that average hourly earnings rose 0.3 percent from February and 4.1 percent from a year ago, the slowest annual pace since mid-2021.
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