Employment growth boomed at the fastest pace since last summer in March as stronger economic growth and aggressive vaccination efforts contributed to a surge in hospitality and construction jobs, the Labor Department reported on Friday.
The number of non-farm workers rose by 916,000 during the month, while the unemployment rate fell to 6%.
Economists polled by Dow Jones had been looking for a 675,000 increase and an unemployment rate of 6%. The total was the highest since the 1.58 million added in August 2020.
“It shows that the economy is healing, that those who have lost their jobs are returning to work as the recovery continues and restrictions are lifted,” said Quincy Krosby, chief marketing strategist at Prudential Financial. “The only concern here is whether we have another wave of Covid leading to another round of closings.”
Stock market futures showed a muted response to the numbers, although government bond yields rose. Wall Street is closed for trading on Friday and the bond market is on a shortened day due to Good Friday observance.
Employment gains were broad-based, but particularly strong in the areas hardest hit by the pandemic. A broader measure of unemployment, which includes discouraged and part-time workers for economic reasons, fell from 11.1% in February to 10.7%.
The workforce continued to grow after losing more than 6 million Americans at one point last year. Another 347,000 workers returned, increasing the activity rate to 61.5% from 63.3% in February 2020.
There are still nearly 7.9 million fewer Americans considered in work than there were in February 2020, while the workforce has declined by 3.9 million.
Leisure and hospitality, a sector vital to restoring the former strength of the labor market, saw the strongest increases of the month with 280,000 new hires. Bars and restaurants added 176,000 while arts, entertainment and recreation added 64,000.
Despite continued growth, the sector remains 3.1 million below its prepandemic in February 2020.
As students returned to school, educational institution hiring also boomed during the month. Local, state, and private educational institutions combined hired 190,000 additional employees for the month.
Construction also saw strong growth of 110,000 new jobs, while professional and business services increased 66,000 and production increased 53,000. It was the strongest hiring month for construction since June 2020.
In addition to the strong growth for March, the previous months were also revised significantly higher. The January total increased 67,000 to 233,000, while February revisions increased the total by 89,000 to 468,000.
A number of other industries also added jobs: transportation and storage (48,000), other services (42,000), welfare (25,000), wholesale (24,000), retail (23,000), mining (21,000) and financial activities (16,000) contributed to the strong month at.
In the other services category, personal and laundry services, which act as proxies for general business operations, saw an increase of 19,000.
“We were expecting a large number and today’s job report was delivered in great volume. This is the downside of what we saw last March and another clear sign that the US economy is on a strong path to growth Recovery is in progress, “said Eric Merlis, head of global market trading for Citizens.
The Bureau of Labor Statistics found persistent classification errors affecting the census and said the unemployment rate could have been up to 0.4 percentage points higher.
There are plenty of signs of growth
The report is in the midst of a number of other indicators pointing to stronger growth as the US tries to shake off the effects of the Covid-19 pandemic. States and municipalities across the country will reopen after a year of reduced capacity.
Business activity has returned to normal levels in much of the country despite the restrictions. A tracker from Jefferies indicates that activity is 93.5% of pre-pandemic levels.
Data from Homebase shows that both employee hours and hours have increased significantly over the past month, with both hospitality and entertainment improving significantly. These sectors have been hardest hit, but have improved over the past two months as governments eased some of the toughest restrictions on activity.
At the same time manufacturing is booming, with a measure of the Institute for Procurement Management’s activity in this sector reaching its highest level since late 1983 in March.
The pace of gains coupled with unprecedented government stimulus has fueled inflation concerns, although Fed officials say increases will be temporary.
The Fed is closely monitoring employment data, but policy makers have repeatedly stated that despite recent improvements, the labor market is nowhere near a point that would force the central bank to hike rates.
However, several economists speculated that March employment numbers could lead the Fed to slow the pace of its monthly asset-buying program until the end of the year.
“While the bright hiring numbers for March won’t result in an immediate policy change, it will only be a matter of time before expectations converge at the start of the March phase, as we saw in March, when the Fed rejuvenates itself until the end of 2021 and also pull market expectations for the first rate hike in the second half of 2023 forward, “wrote Joseph Brusuelas, chief economist at RSM.
The Fed is currently buying at least $ 120 billion worth of bonds every month while keeping short-term lending rates near zero.