Total nonfarm payroll employment rose by 236,000 in March, according to the latest jobs report from the U.S. Bureau of Labor Statistics. The unemployment rate and the number of unemployed persons both remained relatively stable month over month at 3.5% and 5.8 million, respectively.
“Today’s job report is about as goldilocks as they come,” says Zonda chief economist Ali Wolf. “The U.S. economy added 236,000 jobs in March, down from an average of nearly 400,000 to start the year. In short, the latest report tells us that, for now, the U.S. economy is slowing, not crashing.”
The labor force participation rate continued to increase in March, reaching 62.6%, and the employment-population ratio edged up over the month to 60.4%. Despite the increases, both measures remain below pre-pandemic February 2020 levels. Over the past 12 months, average hourly earnings have increased by 4.2%.
“Wage growth was still up compared to last year, but it is showing signs of decelerating,” says Wolf. “The labor force participation rate improved for the fourth month in a row, yet remains off pre-pandemic levels.”
Doug Duncan, chief economist of Fannie Mae, says while the wage growth has decelerated in recent months, it remains higher than typical wage growth prior to the pandemic.
“[Wage growth] illustrates that the labor market continues to exert inflationary pressures in the economy,” Duncan says. “We continue to view inflation risks as skewed to the upside, which suggests that the Federal Reserve may keep rates higher for longer until it sees a meaningful increase in the unemployment rate.”
Among the unemployed, the number of permanent job losers increased by 172,000 to 1.6 million in March, and the number of reentrants to the labor force declined by 182,000 to 1.7 million. The number of long-term unemployed—those jobless for 27 weeks or more—remained at 1.1 million and represented 18.9% of all unemployed individuals.
The number of persons not in the labor force who currently want a job was little changed at 4.9 million in March and returned to its pre-pandemic February 2020 level. Among those not in the labor force who wanted a job, the number of persons marginally attached remained at 1.3 million. The number of discouraged workers, a subset of the marginally attached who believed no jobs were available to them, was little changed month over month at 351,000.
During the month, employment grew the most in leisure and hospitality (+72,000), government (+47,000), professional and business services (+39,000), and health care (+34,000).
“As has been the case recently, employment growth in the service-providing sectors remains strong, with 196,000 jobs gained in March,” says Duncan. “On the other hand, the goods-providing segment showed an overall decline this month, with the construction and manufacturing sectors seeing declines of 9,000 and 1,000, respectively. We also note that residential construction (including specialty trade contractors) fell by 7,000 in March and is down nearly 14,000 so far in 2023, likely contributing to continued supply constraints in the home building sector.”
