WASHINGTON (AP) — America’s employers delivered another outpouring of jobs in March, adding a sizzling 303,000 workers to their payrolls and bolstering hopes that the economy can vanquish inflation without succumbing to a recession in the face of high interest rates.
Last month’s job growth was up from a revised 270,000 in February and was far above the 200,000 jobs that economists had forecast. By any measure, it amounted to a major burst of hiring, and it reflected the economy’s ability to withstand the pressure of high borrowing costs resulting from the Federal Reserve’s interest rate hikes. With the nation’s consumers continuing to spend, many employers have kept hiring to meet steady customer demand. This report is like the macroeconomist’s Holy Grail. It’s pointing to noninflationary growth. It suggests that the Fed can walk and chew gum at the same time, bringing down inflation without crippling the labor market
Friday’s report from the Labor Department also showed that the unemployment rate dipped from 3.9% to 3.8%. The jobless rate has now remained below 4% for 26 straight months, the longest such streak since the 1960s. The government also revised up its estimate of job growth in January and February by a combined 22,000.
Normally, a blockbuster bounty of new jobs would raise concerns that a vibrant labor market would force companies to sharply raise pay to attract and keep workers, thereby fanning inflation pressures. But the March jobs report showed that wage growth was mild last month, which might allay any such fears. Average hourly wages were up 4.1% from a year earlier, the smallest year-over-year increase since mid-2021. From February to March, though, hourly pay did rise 0.3% after increasing 0.2% the month before.
The economy is sure to weigh on Americans’ minds as the November presidential vote nears and they assess President Joe Biden’s re-election bid. Many people still feel squeezed by the inflation surge that erupted in the spring of 2021. Eleven rate hikes by the Fed have helped send inflation tumbling from its peak. But average prices are still about 18% higher than they were in February 2021 — a fact for which Biden might pay a political price.
In a statement Friday, though, Biden argued that the economy’s strong performance means that his policies are paying off.
“My plan is growing the economy from the middle out and the bottom up, investing in all Americans and giving the middle class a fair shot,” he said. “Inflation has come down significantly. We’ve come a long way, but I won’t stop fighting for hard-working families.” My plan is growing the economy from the middle out and the bottom up, investing in all Americans and giving the middle class a fair shot. Inflation has come down significantly. We’ve come a long way, but I won’t stop fighting for hard-working families.President Joe Biden
The 303,000 jobs that the economy added in March were the largest gain since last May. And they boosted average monthly job growth so far this year to a vigorous 276,000, an improvement even on 2023’s robust average of 251,000.
The unemployment rate fell last month even though a sizable 469,000 people entered the labor force looking for work. That influx increased the proportion of Americans who either have a job or are looking for one from 62.5% in February to 62.7%. A bigger labor force tends to ease pressure on companies to significantly raise wages, thereby slowing inflation pressures.
Though most industries added jobs last month, hiring was mainly concentrated in three categories: Healthcare and private education, leisure and hospitality and government accounted for nearly 69% of the hiring. In addition, construction companies added a solid 39,000 jobs.
Four years after the pandemic curbed travel and forced shutdowns of restaurants, bars and entertainment venues, those industries have finally regained their pre-pandemic employment level, with a category that includes such businesses adding 49,000 jobs in March.
The Fed’s policymakers are tracking the state of the economy, the job market and inflation to determine when to begin cutting interest rates from their multi-decade highs. Rate cuts by the Fed would likely lead, over time, to lower borrowing rates across the economy.
The central bank’s policymakers started raising rates two years ago to try to tame inflation, which by mid-2022 was running at a four-decade high. Those rate hikes — 11 of them from March 2022 through July 2023 — helped drastically slow inflation. Consumer prices were up 3.2% in February from a year earlier, far below a peak of 9.1% in June 2022.
