The U.S. economy experienced a significant rise in new jobs last month, according to the latest report from the U.S. Bureau of Labor Statistics.
Far outpacing expectations, 303,000 new jobs came to be in March, though the unemployment rate saw little change at 3.8% with 6.4 million people unemployed. In fact, the unemployment rate has been hovering between 3.7-3.9% since August 2023.
“A resilient labor market and strong economy, coupled with inflation that remains above the Federal Reserve’s two-percent target, supports the Fed’s reluctance to cut the federal funds rate,” commented Odeta Kushi, deputy chief economist at First American Economics.
Job growth far outpaced expectations of 200,000 new jobs for the period, according to the Dow Jones consensus forecast.
The Federal Reserve closely monitors key indicators for inflationary pressures such as the jobs report. Fed Chairman Jerome Powell said the central bank was likely to cut its interest rate at some point this year during a speech at Stanford University earlier in the week.
“The recent data do not...materially change the overall picture, which continues to be one of solid growth, a strong but rebalancing labor market, and inflation moving down toward 2% on a sometimes bumpy path,” Powell said.
The average monthly jobs gain over the last 12 months was 231,000, significantly lower than the growth seen in March. Job gains were experienced across various industries, including healthcare (+72,000); government (+71,000), and most notably, construction, which added 39,000 jobs in March, nearly double the sector’s average monthly gain of 19,000 over the prior 12 months.
“On the surface and under the hood, this was a goldilocks jobs report,” Kushi pointed out. “Strong payroll growth, but the growth was non-inflationary – year-over-year wage growth is slowing, labor participation is up.”
At the end of 2023, the market was expecting the Fed to cut rates six to seven times in 2024, she added. “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 two percent target. As a result, expectations for rate cuts have crashed, and the majority expect three or fewer rate cuts this year.”
Lawrence Yun, chief economist for the National Association of Realtors, commented on Friday’s jobs report as well.
“More jobs mean more potential housing demand in the future,” Yun said. “But more jobs also mean the interest rate decline could stall as the Federal Reserve re-evaluates inflation risk. Wage growth was 4.1% in March after two straight years of above 5% gains. This decelerating wage growth can lessen consumer price inflation.”
Yun went on to predict mortgage rates to remain unchanged over the next few months.
April’s jobs report is set to be released on Friday, May 3 at 8:30 a.m. ET.
