March 2021 jobs report exceeds expectations

March 2021 jobs report exceeds expectations

Job growth exploded in March at the fastest pace since last summer, as stronger economic growth and an aggressive vaccination effort helped to spur jobs in hospitality and construction, reported Friday the Ministry of Labor.
The non-farm payroll increased by 916,000 for the month while the unemployment rate fell to 6%.

Economists polled by Dow Jones were looking for an increase of 675,000 and an unemployment rate of 6%. The total was the highest since the 1.58 million added in August 2020.

“It shows that the economy is healing, that those who have lost their jobs are returning to the workforce as the recovery continues and restrictions are lifted,” said Quincy Krosby, chief market strategist at Prudential Financial. “The only concern here is if we have another wave of Covid which leads to another round of closures. ”

Futures in the stock markets showed a moderate reaction to the numbers, although government bond yields rose. Wall Street is not open for trading on Fridays and the bond market is on a shortened day due to the Good Friday observance.

A more comprehensive measure of unemployment that includes discouraged workers and those in part-time jobs for economic reasons fell to 10.7% from 11.1% in February.

The labor force has continued to grow after losing more than 6 million Americans at one point last year. Another 347,000 workers returned, bringing the participation rate to 61.5%, up from 63.3% in February 2020.

There are still nearly 5 million fewer Americans employed than a year ago, while the labor force is down 2.2 million.

Leisure and hospitality, an essential sector to restore the labor market to its former strength, posted the strongest gains of the month with 280,000 new jobs. Bars and restaurants added 176,000 while arts, entertainment and recreation contributed 64,000 in total.
Even with the continued gains, the sector remains 3.1 million below its pre-pandemic total in February 2020.

With students returning to school, hires in the education sector also exploded during the month. Local, public and private educational institutions have combined to hire 190,000 more employees for the month.

Construction also saw a significant gain of 110,000 new jobs, while professional and commercial services added 66,000 and manufacturing increased by 53,000. For construction, it was the strongest month of hiring since June 2020.

In addition to the powerful gains in March, the previous months have also been revised significantly upwards. January’s total increased from 67,000 to 233,000, while February’s revisions brought the total from 89,000 to 468,000.

A large number of other industries also created jobs: transportation and warehousing (48,000), other services (42,000), social assistance (25,000), wholesale trade (24,000), retail (23,000) , mining (21,000) and financial activities (16,000) contributed to this strong month.

Within the other services category, personal and laundry services, which are used as an indicator of general business activity, increased by 19,000.

“We were expecting a large number and today’s jobs report was delivered in a big way. This is the flip side of what we saw for March of last year and another clear sign that the US economy is on the right track to recovery, ”said Eric Merlis, head of trading at global markets at Citizens.

The Bureau of Labor Statistics noted ongoing classification errors affecting the count and said the unemployment rate could have been up to 0.4 percentage point higher.

Signs of growth abound

The report comes amid a slew of other indicators pointing to stronger growth as the United States tries to shake off the effects of the Covid-19 pandemic. States and municipalities across the country continue to reopen after a year of reduced capacity operations.
Business activity has returned to near-normal levels across much of the country despite the restrictions, with a Jefferies tracker showing activity is at 93.5% of its pre-pandemic level.

Data from Homebase shows that employees working and hours worked have both grown strongly over the past month, with significant improvements in both hospitality and entertainment. These sectors have been the hardest hit, but have improved over the past two months as governments eased some of the toughest restrictions on activity.

At the same time, the manufacturing sector is booming, with an activity indicator from the Institute for Supply Management in the sector reaching its highest level since late 1983 in March.

The pace of gains combined with the unprecedented level of government stimulus has raised concerns about inflation, although Federal Reserve officials say any increase will be temporary.

The Fed is keeping a close eye on the jobs data, but policymakers have repeatedly said that even with recent improvements, the labor market is nowhere near a point that would push the central bank to raise rates. interest.


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