Huge Beat: March Jobs Soar By 916K, Smashing Expectations

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by Tyler Durden
Friday, Apr 02, 2021 - 08:35 AM

It wasn't quite the whisper number of 1 million jobs, but it was close: moments ago the BLS reported ago that in March the US added a total of 916K jobs, smashing expectations of 660K, nearly triple the original February print of 379K and was the strongest payrolls report since last August. Of this total, private payrolls rose 780K vs 643K estimate, and up from an upward revised 558k. The household survey was bit more muted, with employment rising 609K to 150.848MM.

Putting the beat in context, it was an almost 2-sigma beat to consensus estimates, if not quite as high as some outlier expectations such as BofA's, which saw a 1MM print today.

Then again, if one also includes the previous monthly payroll revisions - which saw January revised up by 67,000, from +166,000 to +233,000, and February revised up by 89,000, from +379,000 to +468,000 - resulting in a January and February combined upward revision of 156,000 higher than previously reported, then we easily get a whopping 1MM plus change in payrolls.

As a result of the burst in new hiring, the unemployment rate dipped from 6.2% to 6.0%, in line with expectations, with both black and hispanic unemployment declining modestly. This was the result of the labor force growing by 347K to 160.558MM, with the number of employed workers rising by 609K to 150.848MM as noted above, while the number of unemployed people declined from 9.972MM to 9.710MM, the lowest since March.

The participation rate resumed its modest increase, rising to 61.5% from 61.4% last month. The number of people not in the labor force remained above 100 million, or 100,445,000 to be precise, of whom 6.85 million want a job now.

The closely watcged number of unemployed people on temporary layoffs declined again, if more modestly, from 2.229MM to 2.026MM. The smaller number of workers left on temporary layoff reduces the scope for the rapid pace of gains seen last summer, but it remains a positive factor relative to the pre-coronavirus pace of job gains.

Comparing permanent and temporary layoffs, we find that while the permanent number has stabilized around 3.4MM, the number of temporary layoffs continues to decline.

Looking at wages, there was some disappointment here, with average hourly earnings declining -0.1% M/M, below the 0.1% estimate, or by 4 cents to $29.96, compared to a 0.3% increase last month; annual earnings growth rose 4.2% also missing the 4.5% estimate and down from 5.2% last month.

The average workweek for all employees increased by 0.3 hour to 34.9 hours in March, following a decline of 0.4 hour in the prior month. In manufacturing, the workweek increased by 0.2 hour to 40.5 hours over the month, and overtime increased by 0.1 hour to 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls rose by 0.3 hour to 34.3 hours.

Looking at the breakdown of jobs, the BLS reported that job growth in March was widespread, with the largest gains occurring in leisure and hospitality, public and private education, and construction. Here is a full breakdown:

  • Employment in leisure and hospitality increased by 280,000 in March, as pandemic-related  restrictions eased in many parts of the country. Nearly two-thirds of the increase was in food services and drinking places (+176,000). Job gains also occurred in arts, entertainment, and recreation (+64,000) and in accommodation (+40,000). Employment in leisure and hospitality is down by 3.1 million, or 18.5 percent, since February 2020.
  • In March, employment increased in both public and private education, reflecting the continued resumption of in-person learning and other school-related activities in many parts of the country. Employment rose by 76,000 in local government education, by 50,000 in  state government education, and by 64,000 in private education. Employment is down from February 2020 in local government education (-594,000), state government education (-270,000), and private education (-310,000).
  • Construction added 110,000 jobs in March, following job losses in the previous month (-56,000) that were likely weather-related. Employment growth in the industry was widespread in March, with gains of 65,000 in specialty trade contractors, 27,000 in heavy and  civil engineering construction, and 18,000 in construction of buildings. Employment in construction is 182,000 below its February 2020 level.
  • Employment in professional and business services rose by 66,000 over the month. In March, employment in administrative and support services continued to trend up (+37,000), although employment in its temporary help services component was essentially unchanged. Employment also continued on an upward trend in management and technical consulting services (+8,000) and in computer systems design and related services (+6,000).
  • Manufacturing employment rose by 53,000 in March, with job gains occurring in both durable goods (+30,000) and nondurable goods (+23,000). Employment in manufacturing is down by 515,000 since February 2020.
  • Transportation and warehousing added 48,000 jobs in March. Employment increased in couriers and messengers (+17,000), transit and ground passenger transportation (+13,000), support activities for transportation (+6,000), and air transportation (+6,000). Since February 2020, employment in couriers and messengers is up by 206,000 (or 23.3 percent), while employment is down by 112,000 (or 22.8 percent) in transit and ground passenger transportation and by 104,000 (or 20.1 percent) in air transportation.
  • Employment in the other services industry increased by 42,000 over the month, reflecting job gains in personal and laundry services (+19,000) and in repair and maintenance (+18,000). Employment in other services is down by 396,000 since February 2020.
  • Social assistance added 25,000 jobs in March, mostly in individual and family services (+20,000). Employment in social assistance is 306,000 lower than in February 2020.
  • Employment in wholesale trade increased by 24,000 in March, with job gains in both durable goods (+14,000) and nondurable goods (+10,000). Employment in wholesale trade is 234,000 lower than in February 2020.
  • Retail trade added 23,000 jobs in March. Job growth in clothing and clothing accessories stores (+16,000), motor vehicle and parts dealers (+13,000), and furniture and home furnishing stores (+6,000) was partially offset by losses in building material and garden supply stores (-9,000) and general merchandise stores (-7,000). Employment in retail trade is 381,000 below its February 2020 level.
  • Employment in mining rose by 21,000 in March, in support activities for mining (+19,000). Mining employment is down by 130,000 since a peak in January 2019.
  • Financial activities added 16,000 jobs in March. Job gains in insurance carriers and related activities (+11,000) and real estate (+10,000) more than offset losses in credit intermediation and related activities (-7,000). Financial activities has 87,000 fewer jobs than in February 2020.

Overall, this was a blockbuster report, which was also "golidlocks": much stronger than estimates, but not too strong, with a small uptick in participation and drop in temporary layoffs, and without wage inflation to spook bonds and spark a 10Y selloff.