March Jobs Report: Out Like a Lamb

The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor Lead Economist Daniel Zhao.

The job market is growing at a slower but still steady pace in March. Payrolls grew by 236,000 jobs and the unemployment rate dropped to 3.5 percent as the labor market stays in its hot-but-cooling phase. After March came in like a lion with a banking crisis, it’s going out like a lamb with a solid jobs report.

Payroll Employment Growth Slows

Employers added 236,000 jobs to payrolls in March, a slower pace than the 326,000 added in February, but still a healthy clip in line with expectations. After January and February surged past expectations, job gains came back down to Earth in March, possibly due to hiring being pulled forward earlier into the year due to milder winter weather.

Leisure & hospitality (+72,000 jobs added) and health care & social assistance (+50,800) continue to power jobs growth as both industries continue their recovery from the pandemic. Construction (-9,000) is finally showing signs of weakening as the rate-sensitive sector feels the weight of monetary policy. Information (+6,000) continues to add jobs despite headlines of tech layoffs, as businesses continue to hire enough to make up for prominent layoffs.

Unemployment Rate Falls

The unemployment rate ticked back down to 3.5 percent in March. The unemployment rate remains near historic lows as the labor market remains hot. The unemployment rate has traditionally been a strong leading indicator of recession, but we see no red flags in today’s report.

Labor Force Participation Hits New Milestones

Labor force participation hit key milestones in the February report and continued reaching new highs in March. Labor force participation rose to 62.6 percent as more Americans enter the workforce. Prime-age labor force participation stayed flat at 83.1 percent, tying the pre-pandemic high.

Increasing labor force participation is an opportunity to continue to support jobs growth with less pressure on inflation. As the Federal Reserve seeks to lower inflation without increasing unemployment, a rising labor force participation rate is its best friend.

Strong Labor Market Boosts Black Workers

Black workers hit key milestones on three major labor market indicators:

Wage Growth Decelerates

Average hourly earnings rose 0.3 percent month-over-month, or 4.2 percent year-over-year, the slowest pace since June 2021, and a welcome sign for a Federal Reserve looking for signs of easing inflationary pressures in the labor market.

Conclusion

The banking turmoil in March makes earlier recession fears real by giving a clear case for how a recession may start, but for now, the labor market remains resilient. The labor market has been a pillar of strength for the expansion so far and today’s report reiterates that it continues to be. As the Federal Reserve looks for evidence that the labor market is coming back into balance, today’s report is a step in the right direction with moderating wage growth but ongoing job gains and rising labor force participation.

More Insights

The headline for today's jobs report should be this: The Black unemployment rate hit a new record low in March, falling to 5 percent, the lowest since records began in 1972.

Overall, the unemployment rate fell back to 3.5 percent in March, staying near historic lows as the labor market remains resilient.

So much for "nobody wants to work anymore": The labor force participation rate ticked up to 62.6 percent in March, another new recovery high. Prime-age labor force participation was flat, tying the pre-pandemic level.

Rising labor force participation is the Fed's best friend, offering a way to support job gains with less inflationary pressure. And we did see that in March with wage growth easing to 4.2 percent year-over-year, the slowest pace since June 2021.

Payrolls grew more modestly in March, adding 236,000 jobs. 236,000 jobs added is the slowest monthly pace since 2020, but still solidly above the 2019 average of 163,000 added monthly and it still looks healthy when you consider that a very strong January and February may have pulled forward some job gains from March.

Payroll gains were strongest in services like they have been for much of the recovery, but job gains did falter in March in construction & manufacturing. Construction is an important industry to watch as a rate-sensitive sector, but it's also possible the warmer weather in January and February pulled hiring forward into the year. Notably, information added 6,000 jobs despite tech layoffs in the headlines.