Employment marches on

Summary

Although slower than in recent months, the 431K increase in employment in March gives a clearer picture of what remains a solid trend in hiring. The strong pace of hiring is being supported by rising labor force participation but is still plenty strong enough to keep the labor market tightening. The unemployment rate fell to a fresh cycle low of 3.6%, while average hourly earnings growth picked up to 0.4%. While the jobs market is not the Fed'snumber one priority at present, today's solid report supports the prospect of a 50 bp increase in the fed funds rate at the FOMC's May meeting.

And the beat goes on

The slowdown in hiring in March leaves nothing to be concerned about on the labor front. Instead, the431K increase in payrolls offers a cleaner read on the trend in hiring after the past few months' reports have been affected by unusual seasonal dynamics and the Omicron COVID wave. Hiring continues along at a robust pace that is still more than twice the average of the past expansion. If the March pace were to be sustained, payrolls would be back to their pre-COVID levels in July of this year.

Further improvement on the labor supply front supported the resilient pace of hiring. The labor force participation rate rose another tick in March to a fresh cycle high of 62.4%. We expect this trend to continue as the availability of jobs continues to pull more workers into the labor market and lessfavorable household finances in the face of inflation and dwindling fiscal support also give a push. The rise in the labor force (418K) still did not match the jump in the household measure of employment(736K), driving the unemployment rate lower than expected to 3.6%.

Employment gains were broad-based across industries and were led by the still-recovering leisure& hospitality sector. Employment in leisure & hospitality rose 112K in March and is now “only” down8.7% since February 2020. Manufacturing employment rose by 38K, including 22 Knew workers in the stretched durable goods industries. Professional & business services, retail trade and construction also saw rock-solid employment gains in the month. Total nonfarm employment is now 1.6 million jobs, or just 1%, below February 2020 levels. Nearly all of these still missing jobs are in leisure & hospitality, health care or state & local governments. Plenty if not most other sectors have seen total employmentregain or surpass their February 2020 employment levels.

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