The headline payroll growth for March exceeded all estimates, with nonfarm payrolls growing by 303k on the month, above a strong 270k in February, and far exceeding consensus estimates of 214k. In addition, after falling in January and February, total employment as reported in the US Census Bureau’s household survey increased 498k in March. The unemployment rate edged lower to 3.8%.
If there were areas of concern among last week’s broad-based job prints, one could focus on where the recent job gains have (or have not) taken place. The labor market, while strong, remains unequal as the typical cyclical areas of job growth have been stagnant. Hiring in March was concentrated in government and non-cyclical industries; government jobs increased by 71k, while healthcare and education added 72k jobs. Indeed, the two largest contributors over the past two years by far have been concentrated in those two sectors.
The most recent US labor market readings only reinforce the notion that job growth continues to underpin the strong economic expansion and on balance, should result in more patience from the Fed in commencing rate cuts. Interest rate markets have reacted accordingly, pushing back the onset of rate cuts to the July meeting and lowering expectations to 2.5 rate cuts total for 2024.
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