Nonfarm payrolls rose by 178K in March, exceeding consensus expectations for an increase of 65K. The revisions made over the previous two months subtracted a total of 7,000 from the previously announced numbers.
- Smoothing out volatility, non-farm payrolls have averaged 68K per month over the past three months or slightly above the breakeven rate of 30K-50K.
Private sector payrolls rose by an impressive 186,000 – the strongest monthly increase since December 2024 – after a decline of 129,000 in February. The bulk of the gains were concentrated in health care and social assistance (+89.9K), construction (+26K) and transportation and warehousing (+21K), although a number of other industries also added jobs during the month. Meanwhile, the federal government cut 18,000 jobs.
In the household survey, the labor force (-396K) declined by much more than civilian employment (-64K), pushing the unemployment rate down to 4.3%. The labor force participation rate fell to 61.9% (from 62.0% the previous month), its lowest level since late 2021.
Average hourly earnings (AHE) rose 0.2% month over month, or nearly half of the gains seen in February. On a twelve-month basis, AHE fell to 3.5% (from 3.8%).
Main effects
Payrolls surprised by rising in March, handily beating expectations but also reversing a decline in February that was affected by strikes and weather-related impacts. Encouragingly, employment widened to its highest level since December 2023, suggesting that it was not simply a reversal of February’s effects that led to last month’s gains.
This morning’s report will be welcome news to policymakers as it helps allay any concerns that may arise after February’s weak employment report. Stability in the labor market should allow policymakers to sit down and better assess the economic impacts of higher oil prices over the coming months. While we still see a path to further rate cuts later this year, the opportunity may narrow, especially if March’s strength in the labor market continues and oil prices remain high.
