US payrolls rose in March by the most in nearly a year and the unemployment rate dropped, pointing to a strong labor market that’s powering the economy.
Nonfarm payrolls advanced 303,000 last month following a combined 22,000 upward revision to job gains in the prior two months, a Bureau of Labor Statistics report showed Friday. The rise exceeded all expectations in a Bloomberg survey of economists.
The unemployment rate fell to 3.8%, while participation rose.
Job growth in March was led by faster hiring in health care, leisure and hospitality, and construction. A measure of the breadth of job gains increased.
Treasury yields rose and S&P 500 index futures remained higher, while the dollar advanced. Traders trimmed bets on the odds the Fed will lower rates in June.
The labor market has been the stalwart of the US economy, giving Americans the wherewithal to keep spending in the face of high prices and borrowing costs. Friday’s data raise questions as to how much the job market is truly moderating, and how crucial that will be to the Federal Reserve in its fight against inflation.
Officials will see fresh figures on consumer and producer prices next week, followed by the March reading of their preferred inflation gauge — the personal consumption expenditures price index — before their April 30-May 1 meeting.
Fed Chair Jerome Powell said Wednesday that labor supply and demand have come into better balance, nodding in part to more immigration. Policymakers have stressed they’re in no rush to lower borrowing costs and that incoming data will guide that decision.
The jobs report is composed of two surveys: one of businesses that generates the payrolls and wage data, and another smaller one of households used to produce the unemployment rate.
The household survey also publishes its own measure of employment, which surged nearly a half million in March after declining in the prior three months. Many economists have discounted the recent weakness in this metric given that other indicators remain strong, such as unemployment claims and consumer spending.
Also in that survey is the participation rate — the share of the population that is working or looking for work — which rose to 62.7%, the first advance since November. The rate for workers age 25-54 ticked down to 83.4%, still near the highest in two decades and also flagged by Powell for helping unwind some of the tightness of the labor market.
Increased participation may also be helping alleviate wage pressures. The survey of establishments showed that average hourly earnings rose 0.3% from February and 4.1% from a year ago, the slowest annual pace since mid-2021.
This article was provided by Bloomberg News.