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Employment: Solid Gains as Unemployment Rate Drops to 3.6%

April 1, 2022
Bottom Line: Job gains in March were solid at 431k, a touch below expectations but there were upward revisions to prior months' gains. The unemployment rate fell two-tenths, a tenth more than expected to 3.6%, as the household survey showed job gains of 736k. Average hourly earnings growth was robust, and there were also upward revisions to prior data. Higher-wage paying jobs like education and health care continued to see gains, helping propel that aggregate wage figure. Overall, this was another solid labor report. Given the  Fed's focus on the strength of the labor market as a reason to tighten monetary policy and the number of Fed officials who have talked about a bigger hike at their next meeting, 50ps at the May 4th meeting looks likely and could be followed by more 50bp hikes in June and July if the labor market data continues on this trajectory.
Payroll Employment
rose by 431k in March, compared with market expectations for an increase of 490k. The prior 2 months were revised, higher in February by 72k and higher in January by 23k.

Government jobs
ROSE by 5k. Consequently, private sector jobs ROSE by 426k.   Overall employment is now 4.5% ABOVE its year-ago level. Over the past 12 months, 6,494k jobs have been created.
In March, the job gains were in:
  • Trade, Transportation & Utilities (+5k with 49k of those in Retail Trade),  
  • Professional & Business Services (+102k with the addition of 4.9k in Temp Help Services),  
  • Leisure & Hospitality (+112k),
  • Manufacturing (+38k),
  • Education & Health Services (+33k),
  • Construction (+19k), and
  • Information (+16k).
The Unemployment Rate FELL by 0.2 percentage points in March to 3.6%, compared with market expectations for a small decline to 3.7%.  Household employment rose by 736k while the labor force increased by 418k, resulting in a decrease in the number of unemployed of 318k.
The Labor Force Participation Rate ROSE by 0.1 percentage points to 62.4%. The Employment-Population Ratio ROSE by  0.2 percentage points to 60.1%.
The number of people Working Part-Time for Economic Reasons ROSE by 44k to 4,149k. while Long-Term Unemployment FELL by 274k to 1,428k (accounting for 24.0% of the unemployed),  while the Mean Duration of Unemployment FELL by 2.4 weeks to 24.2 weeks. There are now 6.0 million people officially unemployed. In addition, there are another 5,737k people who say they want a job but are not currently looking for one.  Finally, another 4,149k people are working part-time because of slack economic conditions.
The Index of Aggregate Hours FELL just slightly, combining the solid gain in private payroll employment and the shorter workweek.
Hourly Earnings ROSE by 0.4% in March, above market expectations of 0.4%. Hourly earnings are now 5.6% ABOVE their year-ago level.
Weekly Earnings also ROSE by 0.1%, the result of the change in hourly earnings and a shorter workweek. Weekly earnings are now 4.6% ABOVE their year-ago level.
The Average Workweek FELL by 0.1 to 34.6 hours, BELOW the market consensus at 34.7 hours.
Article by Contingent Macro Advisors