Nonfarm payrolls rose by 178k in March, well ahead of the consensus forecast calling for a gain of 65k. Revisions to the two prior months subtracted a total of 7k from the previously reported figures.
- Smoothing through the volatility, nonfarm payrolls averaged 68k per-month over the last three months or slightly above the breakeven rate of 30k-50k.
Private payrolls rose by an impressive 186k – its strongest monthly gain since December 2024 – following a decline of 129k in February. The bulk of the gains were concentrated in health care & social assistance (+89.9k), construction (+26k) and transportation & warehousing (+21K), though a number of other industries also added jobs on the month. Meanwhile, the federal government shed 18k jobs.
In the household survey, the labor force plummeted (-396k) by considerably more than civilian employment (-64k), pushing the unemployment rate down a tick to 4.3%. The labor force participation rate fell to 61.9% (from 62.0% the month prior), which is its lowest level since late-2021.
Average hourly earnings (AHE) rose 0.2% month-on-month (m/m), or roughly half the gain seen in February. On a twelve-month basis, AHE ticked down to 3.5% (from 3.8%).
Key Implications
Payrolls surprised to the upside in March, handily beating expectations but also more than reversing February’s pullback which was impacted by strike and weather-related effects. Encouragingly, the breadth of hiring widened to its highest level since December 2023, suggesting it wasn’t only a reversal of February effects driving last month’s gains.
This morning’s report will come as welcome news for policymakers as it helps to assuage any fear that may have arisen following February’s weak employment report. Stability in the labor market should allow policymakers to sit tight and better assess the economic impacts stemming from higher oil prices over the coming months. While we still see a path for a few more rate cuts later this year, the window could be narrowing, especially if March’s strength in the labor market were to persist and oil prices were to remain elevated.
