The pace of job growth in March is the fastest since the summer of last year, as stronger economic growth and an aggressive vaccination effort contributed to a surge in hospitality and construction jobs, reported Labor Department Friday. The nonfarm payrolls fell for the month to 916,000, while the unemployment rate fell to 6%. Economists surveyed by Dow Jones were expecting 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 recovering, that those who lost their jobs are coming back into the workforce as the recovery continues and limits 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. Stock market futures showed muted reaction to the numbers, although government bond yields rose. Wall Street is not open for trading Friday, and the bond market is closed on a shortened day due to the Good Friday observances. Employment gains were broad-based, but were especially strong in areas most hit by the pandemic. A more encompassing measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons dropped to 10.7% in February from 11.1% in January. The labor force continued to grow after losing more than 6 million Americans at one point last year. Another 347,000 workers came back to bring the labor force participation rate to 61.5%, compared to 63.3% in February 2020. There are still nearly 7.9 million fewer Americans counted as workers than in February 2020, while the labor force is 3.9 million employed Leisure and hospitality, a sector critical to restoring the jobs market to its former strength, showed the strongest gains for the month with 280,000 new hires.
The bars and restaurants added 176,000, while arts, entertainment and recreation contributed to the total of 64,000. Even with the continued gains, the sector remains in February 2020 3.1 million below its pre-pandemic total of 3.1 million. With students returning to school, the Education hiring boomed during the month as well. Local, state and private education institutions combined to hire 190,000 more staff for the month. Construction also saw a healthy gain of 110,000 new jobs while professional and business 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 mighty gains for March, previous months were also revised considerably higher in 2015. The total for January increased from 67,000 to 233,000, while the February revisions raised the total by 89,000 to 468,000. A slew of other industries also added jobs: Transportation and warehousing other services Social assistance Retail Mining and financial activities contributed to the strong month. Within the other categories, personal and laundry services, which serves as proxy for general business activity, saw an increase of 19,000. We were expecting a major number and today's jobs report is delivered in a big way. It is the flip side of what we saw in March last year and another clear sign that the US economy is on a strong path to recovery, said Eric Merlis, head of Global Markets Trading at Citizens. The Bureau of Labor Statistics noted ongoing classification errors that affect the count and said that the unemployment rate could have been as much as 0.4 percentage points higher. The report comes amid a slew of other indicators pointing to stronger growth as the US continues to shake off the effects of the Covid- 19 Pandemic.
After a year of operation at reduced capacity, the states and municipalities across the country continue to reopen. Business activity has returned to close to the pre-pandemic levels in much of the country despite the restrictions, with a tracker from Jefferies indicating that activity is at 93.5% of its normal level. The data from Homebase shows that employees working and hours worked over the past month both have increased significantly in both hospitality and entertainment, with significant improvements in both production and staff productivity. Those are the hardest to control but have improved over the past two months as the governments have loosened up on some of the harshest restrictions on activity. At the same time, manufacturing has a boom, with an ICM gauge of activity in the sector reaching its highest level since March 1983 in March. The pace of gains combined with the unprecedented level of government stimulus has sparked worries about inflation, though Federal Reserve officials say any increases will be temporary. The Fed is keeping a close eye on the jobs data, but policymakers have said repeatedly that even with the recent improvements, the labor market is nowhere near a point that would push the central bank into raising interest rates. However, several economists speculated that the March job numbers could push the Fed into slowing the pace of its monthly asset buying program by the end of the year. While the gaudy hiring numbers for March will not lead to an immediate policy shift, if the economy makes a string of months like what we 've seen in March, it will only be a matter of time before expectations on the start of Fed tapering move into the late part of 2021, wrote Joseph Brusuelas, chief economist at RMS. The Fed currently holds at least$ 120 billion of bonds each month while it uses short-term borrowing rates near zero.