March Jobs Come In Red-Hot At 303K, Above Highest Estimate, As Unemployment Rate Drops

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by Tyler Durden
Friday, Apr 05, 2024 - 12:47 PM

As we wrote in our preview, while big data hinted at a weaker than expected March jobs print, the relentless influx of immigrants would lead to a hotter than expected payrolls number.

Sure enough, the illegals won again when moments ago the BLS reported that in March, the US added a whopping 303K jobs, tied for the highest since Jan 2023!

The number was not only hotter than last month's (downward, of course) revised number of 270K (was 275K) but was above the highest Wall Street estimate of 290K (from Jobdig, Inc) and as shown below this was the latest multiple-sigma beat to expectations, this month coming in at 4x.

The March number, which will be revised substantially lower next month, follows two downward revisions, follows a 5,000 downward revision to the February number from +275,000 to +270,000, and a 27,000 upward revision to January from +229,000 to +256,000.

What is perhaps more notable is that after several months of declines in the Household survey, in March the number of people actually employed finally rebounded rising by 498K, to 161.466 million from 160.968 million. Still, as shown below, the data series has a lot of catching up to do.

Turning our attention to the unemployment rate, it unexpectedly dipped again, dropping to 3.8%, from 3.9%, in line with estimates, as the number of unemployed workers dipped modestly from 6.458 million to 6.429 million while the number of employed workers rose by almost half a million workers; the unemployment rate for Blacks (6.4 percent) increased in March to the highest level in almost two years, while the rates for Asians (2.5 percent) and Hispanics (4.5 percent) decreased. The jobless rates for adult men (3.3 percent), adult women (3.6 percent), teenagers (12.6 percent), and Whites (3.4 percent) showed little or no change over the month.

In contrast, the participation rate rose from 62.5% to 62.7%, above the 62.6% expected, as the overall civilian labor force increased slightly less than the number of employed people.

The silver lining to today's jobs report is that despite the hot print, the average hourly earnings came in as expected, rising 0.3% MoM, up from last month's upward revised 0.2% sequential increase (revised from 0.1%), On an annual basis, the hourly earnings rose 4.1%, as expected, and down from 4.3%. This was the lowest print in almost three years: the last time wages rose by this much was the summer of 2021.

Taking a closer look at wages, In March, average hourly earnings for all employees on private nonfarm payrolls increased by 12 cents, or 0.3 percent, to $34.69. Over the past 12 months, average hourly earnings have increased by 4.1 percent. In March, average hourly earnings of private-sector production and nonsupervisory employees edged up by 7 cents, or 0.2 percent, to $29.79.

One reason why average hourly earnings did not increase is that in March, the average workweek for all employees on private nonfarm payrolls edged up by 0.1 hour to 34.4 hours. In manufacturing, the average workweek was unchanged at 40.0 hours, and overtime edged down by 0.1 hour to 2.9 hours in March. The average workweek for production and nonsupervisory employees on private nonfarm payrolls also edged up by 0.1 hour to 33.9 hours.

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According to the BLS, the number of people not in the labor force who want a job came in little changed at 5.4 million.

“These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.”

Also according to the report, the number of people employed part time for economic reasons, at 4.3 million. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

Finally, the BLS reports that among those not in the labor force who wanted a job, the number of people marginally attached to the labor force, at 1.6 million, was little changed in March. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, was little changed at 337,000 in March.

* * *

Taking a closer look at the composition of jobs by industry we find the following:

  • Health care added 72,000 jobs in March, above the average monthly gain of 60,000 over the prior 12 months. In March, job growth continued in ambulatory health care services (+28,000), hospitals (+27,000), and nursing and residential care facilities (+18,000).
  • In March, employment in government increased by 71,000, higher than the average monthly gain of 54,000 over the prior 12 months. Over the month, employment increased in local government (+49,000) and federal government (+9,000).
  • Construction added 39,000 jobs in March, about double the average monthly gain of 19,000 over the prior 12 months. Over the month, employment increased in nonresidential specialty trade contractors (+16,000).
  • Employment in leisure and hospitality trended up in March (+49,000) and has returned to its  pre-pandemic February 2020 level. Over the prior 12 months, job growth in the industry had averaged 37,000 per month.
  • Employment in the other services industry continued its upward trend in March (+16,000). The industry had added an average of 8,000 jobs per month over the prior 12 months. Employment  in other services remains below its February 2020 level by 40,000, or 0.7 percent.
  • Employment in social assistance continued to trend up in March (+9,000), below the average monthly gain of 22,000 over the prior 12 months.
  • In March, employment was little changed in retail trade (+18,000). A job gain in general merchandise retailers (+20,000) was partially offset by job losses in building material and garden equipment and supplies dealers (-10,000) and in automotive parts, accessories, and tire retailers (-3,000).
  • Employment showed little or no change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; transportation and warehousing; information; financial activities; and professional and business services.

A visual breakdown shows that the bulk of jobs was in Education/Health and Government jobs, which accounted for more than half of all March jobs.

And a closer look at the best performing job category under Biden: government. In March, this added 71K, the second most since the start of 2023.

In sum: health care added 72,000 jobs; government roles increased by 71,000; other notable gains were construction, adding 39,000, and leisure and hospitality, adding 49,000.

Finally, for those wondering if the jobs were all part-time, the answer is a resounding yes: in March, full-time jobs dropped by 6,000 as Part-time jobs soared by 691,000.

What was Wall Street's reaction? Here are some hot takes, starting with Bloomberg's Enda Curran who writes that since it’s an election year, these numbers will be trumpeted by the White House as evidence of their stewardship. The downside however is that they lean against calls for a rate cut, "something of a double-edged political sword."

Echoing this, Torsten Slok, Apollo's resident in house permabear who will never relax until you have sold all your assets to, well, Apollo writes that the number confirms the Fed will not cut rates this year:

“The source of this strength is easy financial conditions. The stock market is up +$10trn over the past five months, which is a significant wealth gain for household balance sheets. Credit spreads are tighter for IG, HY, and loans. Big rebound in IG issuance and HY issuance in January, February, and March. IPO activity is coming back and M&A activity is coming back. These factors will all support consumer spending, capex spending, and hiring over the coming quarters... We are sticking to our view that the Fed will not cut interest rates this year.”

Here is Seema Shah, chief global strategist, Principal Asset Management:

“At first sight, the jobs report leans against three cuts. Yet the average hourly earnings figures are in line with expectations and, as Powell has made quite clear in recent speeches, a strong labor market is not a concern if price pressures are moderating... Next week’s CPI report is the one that is pivotal for rate expectations. But today’s report should reassure markets that, if the Fed does not cut in June, it’s because the economy is still strong and earnings should remain in an upswing.”

Priya Misra, portfolio manager at JP Morgan Investment Management, says:  

“If service inflation shows signs of picking up in the CPI and PCE reports later this month, Fed ‘patience’ might run thin. The market reaction makes sense to me – higher rates and weaker risk sentiment. I think risk assets are paying attention to rates now. Risk assets ignored the rates move until this week since Jan and Feb could be glossed over as noise. But if the economy is staying too hot, the market should question Fed cuts and the specter of Fed hikes comes back to the market.”

Ed Al-Hussainy, rates strategist at Columbia Threadneedle Investment, says:

The key question is whether the combination of higher demand growth, momentum in employment, and the easing of financial conditions since last October start to show up in inflation. We’ll get another look at that in CPI/PPI data next week.”

Ali Jaffery, an economist at CIBC Capital Markets, sees immigration playing a role in today’s numbers:

“This has raised the sustainable level of job gains from 100K before the pandemic to about 180K. Today’s data is likely more evidence of that trend and supports the Fed’s view that the increase in labor supply is driving growth in the job market and the economy more broadly. Overall, the March employment report leans against an earlier cut by the Fed.”

Bryce Doty of Sit Investment Associates:

“Incredibly strong jobs data puts the bond market in panic mode over Fed cuts being delayed."


“I keep scratching my head wondering why so many people are deciding to get jobs now when millions of job openings have been available for at least a couple of years. It’s not as though the economy suddenly produced these jobs. So people joining the workforce now must need the jobs. As a result, I’m cautious about how strong the jobs data really is for the economy. We expect a quarter point cut in the third quarter and a half point cut in the fourth quarter.”

We close again with Bloomberg's Enda Curran who writes that "at face value, these job numbers hardly lend themselves to a near-term rate cut."

Bottom line: strong report, until you look under the surface. For now, however, it will serve the White House to pitch Bidenomics as some miraculous economic panacea, while the market will try to soothe itself that the number was good, but not hot enough to prevent Powell from cutting rates in June.