American businesses added jobs last month at a rate even more rapid than before the pandemic. It was also 31% higher than the average job growth of 231,000 in all the last twelve months.
The jobs increase beat last month's increase of 275,000 jobs by a substantial margin as well.
Coming along with that was a slight lowering in the country’s unemployment rate. That fell from February’s 3.9% to 3.8%. This makes the longest continuous time unemployment has remained below 4% in over fifty years.
The unemployment rate has remained between 3.9% to 3.7% since August of last year.
The steady and still surprising increase in jobs, coupled with relatively low inflation rates, also contributed to another steady rise in consumer sentiment, an important precursor to spending in a business climate which still depends on individual buying for over 70% of economic growth. The University of Michigan’s Index of Consumer Sentiment rose by another 3.3% last month to a new post-pandemic high of 79.4%, compared with the year-ago equivalent value of 62.0%. Short-term expectations for the economy were even more positive, reaching 82.5% thanks to a 3.9% bump last month. That number is up 24.4% from last year’s 66.3%.
The University of Michigan’s “Surveys of Consumers” head, Joanne Shu, noted that a key contributing factor to the growing optimism among consumers this time was a rising confidence in the “assessments and expectations of personal finances.”
She did warn, however, that even assuming the economy remains stable, perceptions as the presidential election year heats up will have more of an effect on how people perceive things.
“As the election season progresses and debates over economic policy become more salient for consumers, their outlook for the economy could become more volatile in the months ahead,” she said in a statement released along with the latest consumer sentiment survey results.
Analysis of Job Growth by Business Sector
Health care employment continued its reign as the strongest sector of the economy with regards to hiring last month. It added 72,000 new employees, a level 20% higher than the average of 60,000 added per month since March of last year. Ambulatory health care services and hospital hiring continued their strong growth from last month, with 28,000 and 27,000 jobs added for those categories, respectively. Nursing and residential care facilities also delivered solid results, up by 18,000.
Government employment was second highest, with 71,000 new positions filled. That represented an even higher rate of growth than health care with respect to this business segment’s average growth of 54,000 jobs in the past year. Within the government industry, local government carried the bulk of the new hiring, with 49,000 additions. The federal government added just 9,000 positions, a conservative number not surprising considering the tight budget restrictions the divided Congress has instituted.
Next on the list was the construction industry. Its hiring increased by a very strong 39,000 number last month. That is over double last year’s average of 19,000. Hiring for nonresidential specialty trade contractors was the largest subsegment in this category for the month. It went up by 16,000 for March.
Fourth in the rankings this month was the leisure and hospitality industry. It rose by 49,000 jobs, putting it back in position at the levels of employment achieved just before the pandemic hit in February 2020. It added 49,000 jobs compared to the mean of 37,000 a year ago. Economists expect hiring in this area to continue to grow as the summer travel season approaches.
The area the Bureau of Labor Statistics refers to as “other services”, a catch-all for business segments which do not fit in well with most others, came in fifth place in March’s rankings with a distant 16,000.
Next was the retail trade group. It added 18,000 jobs, down just slightly from last month’s increase of 19,000. Its growth was a mixed bag last month, with very strong surge of 20,000 additions in the general merchandise subsector, with a few other parts of this category growing only relatively slowly. The total job gains this sector could have produced if it had been uniform were mitigated by a loss of 10,000 jobs in the garden equipment and supplies dealers area and a drop of 3,000 for automotive parts, accessories, and tire retailers.
At number seven in the ranks was the social assistance category. It rose slightly, by 9,000 for the month. That is well below the average for this category of 22,000 positions added monthly since a year ago.
Most other major industry categories remained relatively flat in overall employment last month. Those included the information services; financial activities; manufacturing; mining, quarrying, and oil and gas extraction; professional and business services; and transportation and warehousing sectors. Each of those has shown stronger growth in past years, with all indications that these businesses have stabilized for the near term.
Average hourly earnings for workers rose by 12 cents to $34.69, a rise of 0.3%. That contributed to net average salary increases of 4.1% since March 2023.
Commentary
While hiring last month may have surprised most economists last month, the primary take-away from March’s hiring results is more about how the economic cycle seems to have settled into a self-reinforcing mechanism which simultaneously is adding jobs at a steady pace without any sector seeing much in the way of overly explosive growth which might backfire, while inflation remains restrained and unemployment continues at record lows.
As Global Chief Economist Joe Davis put it after the Bureau of Labor Statistics posted these results yesterday, the economy’s current “continued vigor” derives its strength from “household balance sheets bolstered by pandemic-related fiscal policy and a virtuous cycle where job growth, wages and consumption fuel one another.”
Nick Bunker, the Indeed jobs site’s economic research director, added his own optimistic view of what March’s numbers mean to U.S. business and the effectiveness of current fiscal policy at the Federal Reserve Board and beyond.
“This was a very strong jobs report across a variety of metrics,” he said. “It gives really positive implications for the short-term health of the labor market and the labor market’s capacity to bounce back from the pandemic.”
Joe Biden, who is in full campaign mode about such issues, noted that the latest jobs “report marks a milestone in America’s comeback” as an economy, and one which continues to outshine much of the rest of the western world.
“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,” he added.