Total nonfarm payroll employment rose by 916,000 in March, while the unemployment rate fell to 6%, according to the latest Employment Situation Summary from the U.S. Bureau of Labor Statistics.
The unemployment rate is down considerably from its high in April 2020, but remains 2.5 percentage points higher than the pre-pandemic level in February 2020. The number of unemployed persons, 9.7 million, continues to trend down but stands 4.0 million higher than in February 2020.
“The continued efficient distribution of effective COVID-19 vaccines will be crucial to support the ongoing recovery, especially for sectors that depend heavily on people gathering in close proximity,” says Doug Duncan, Fannie Mae chief economist. “… Overall, this morning’s report is consistent with our expectation that the economic recovery is set to accelerate over the next couple of quarters. In particular, we are expecting full-year GDP growth for 2021 to exceed 6%, which would be the fastest annual pace since 1983.”
Among the unemployed, the number of persons on temporary layoff fell by 203,000 in March, down to 2 million. This is down from the recent high of 18 million in April 2020, but 1.8 million higher than in February 2020. The number of permanent job losers, at 3.4 million, remains 2.1 million higher than in February 2020.
The number of long-term unemployed—jobless for 27 weeks or more—changed little month to month at 4.2 million, up 3.1 million since February 2020. This group makes up 43.4% of the total unemployed.
In March, 21% of employed persons teleworked because of the COVID-19 pandemic, down from 22.7% in February, and 11.4 million reported that they had been unable to work because their employer had closed or lost business because of the pandemic. Among that number, 10.2% reported they had received some pay from their employer for hours not worked. Among those not in the labor force, 3.7 million were prevented from looking for work due to the pandemic.
“The prime-age labor force participation rate hardly budged and remains 1.6 percentage points below the pre-COVID rate. A smaller active workforce means less labor resources available for the production of goods and services, which could hinder the economic recovery,” says Odeta Kushi, First American deputy chief economist. “The prime-age labor force participation rate fell in the aftermath of the Great Recession and it took a decade to return to the pre-Great Recession average (2001-2007) of 83%. The COVID recession wiped out those gains, but, with more vaccinations and businesses reopening, there is greater opportunity to draw workers off the sidelines.”
Job growth was “widespread” in March, according to BLS. Leisure and hospitality showed the strongest gains, with 280,000 new jobs, though total employment is down by 3.1 million since February 2020. Construction added 110,000 jobs across all sectors, rebounding from the previous month’s losses, which were likely weather related.
“Residential construction jobs increased 3.9% from the pre-2020 recession peak in February 2020. The construction industry remains a labor-intensive industry. We need more hammers at work to build more homes,” Kushi says. “[The] March jobs report indicates the highest number of residential construction workers since 2008. Increasing the number of workers is critically important to alleviating the labor shortage challenge. It’s very hard to increase housing starts without increasing construction employment.”
