A (Nearly) Perfect Jobs Report

It doesn't get much better than this

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Highlights

• U.S. payroll employment surged in March, growing way faster than expected.

• The unemployment rate inched down to (an absurdly low) 3.8%.

• Average hourly earnings are up 4.1% over the past year, the slowest y-o-y growth since June 2021, but increased a faster-than-ideal 0.35% for the month.

• There’s really nothing not to like here, though this suggests rate cuts could come later than expected in 2024.  

The Headline Numbers

Employment increased by a blistering 303,000 in March. That’s about 100,000 more jobs than expected and matches the fastest monthly growth since January 2023. On top of that, revisions to January and February’s data added another 22,000 jobs.

We’re approaching Oprah levels of labor market performance—you get a job, you get a job, everybody gets a job!

It gets better. The unemployment rate fell, and more importantly, it fell for the right reasons; the labor force grew at the fastest rate since August, unemployment declined, and employment boomed.

If you really want to nitpick, average hourly wages grew 0.35% in March. That equates to a 4.2% annualized rate of increase, a little faster than ideal from an inflation perspective. Still, wages are up just 4.1% over the past year, and that’s the slowest annual increase since the middle of 2021.

By Industry

No industry lost jobs in March, though employment was unchanged in information and manufacturing.

The private education and health services category continues to add jobs at an incredible pace, though virtually all of those 88,000 jobs were in healthcare. Government also added a lot of jobs for the month, with the majority of that hiring occurring at the local level.

Construction employment grew by 39,000, the largest monthly gain in over two years. You can read what Anirban had to say about that over at ABC.

What do we take from this?

You can forget about recession. This is about as good as jobs reports get. Sure, you could quibble about the faster-than-ideal growth in average hourly earnings, and this report ups the odds that we’ll be waiting until the second half of the year for rate cuts.

Still, employers are hiring, unemployment is low, and the labor force is growing. What more could you want?

What’s next?

Anirban is currently working on today’s Week in Review, our every-Friday post where we concisely cover everything you need to know about the economy. That’s just for paying subscribers. If that’s not you and you want it to be, just click the button below: