Total nonfarm payroll employment increased by 431,00 last month, a decrease in magnitude from the 678,000 jobs added in February, according to the latest jobs report from the U.S. Bureau of Labor Statistics. The unemployment rate decreased 0.2 percentage points from February to 3.6%.
The job gains in March were broad-based across many sectors, says Nik Scoolis, manager, housing economics for Zonda.
“As in past months’ reports, job gains were concentrated in the service-providing sectors, with leisure and hospitality (+112,000), professional and business services (+102,000), and education and health services (+53,000) leading the way,” says Mark Palim, deputy chief economist at Fannie Mae.
Despite the employment growth, total nonfarm payrolls remain 1.6 million below February 2020 pre-pandemic levels. Scoolis says construction became the latest sector to surpass pre-pandemic levels in March, joining five other sectors. According to Palim, the growth and recovery in residential construction employment should help ease the supply constraints being experienced industrywide.
The number of unemployed individuals decreased by 318,000 in March to 6 million. Both the unemployment rate and the number of unemployed persons are little different from their values in February 2020 (3.5% and 5.7 million, respectively).
Among the unemployed, the number of permanent job losers decreased by 191,000 to 1.4 million in March, and the number of persons on temporary layoff was essentially unchanged at 787,000. The number of job leavers—unemployed individuals who quit or voluntarily left their previous job and began looking for new employment—decreased by 176,000 to 787,000 in March.
The number of long-term unemployed individuals decreased 274,000 to 1.4 million. The count of long-term unemployed persons is 307,000 higher than the pre-pandemic count in February 2020. Long-term unemployment accounted for 23.9% of the total unemployed individuals in March.
The labor force participation rate in March was 62.4%, up 0.1 percentage point from February. The employment-population ratio increased by 0.2 percentage point to 60.1% in March. Both measures remain below their February 2020 values—63.4% and 61.2%, respectively.
“The U-6 unemployment rate, which is a broader measure of unemployment, has dropped below the February 2020 level, but the labor force participation rate remains 1 percentage point below [February 2020 levels],” Scoolis says. “This implies that most of the jobs remaining to be recovered can be attributed to participation, or a lack thereof.”
Average hourly earnings increased 5.6% on a year-over-year basis in March. Palim says the earnings growth is a “clear sign that firms remain eager to hire and likely add[s] to inflationary pressures in the economy.”
The number of persons not in the labor force who currently want a job increased 382,000 to 5.7 million in March, following a decrease of a similar magnitude in February. The number of discouraged workers, a subset of the marginally attached who believe that no jobs are available for them, was essentially unchanged over the month at 373,000.
According to the Household Survey Supplemental Data, the share of employed persons who teleworked in March due to the pandemic decreased to 10%, down from 13% in February. During March, 2.5 million people reported that they had been unable to work because their employer closed or lost business due to the pandemic, a significant decrease from the 4.2 million people in February. Among those not in the labor force in March, 874,000 were prevented from looking for work due to the pandemic, down from 1.2 million in February.
The strong jobs report, both in terms of robust payroll gains and rapid wage growth, validates the market’s expectation that the Federal Reserve will continue to tighten by raising the policy rate multiple times over the coming months,” Palim says. “For the housing market, this report is consistent with the view that the increase in mortgage rates since the end of 2021 will be sustained for the remainder of the year.”
