Updated Apr 5, 2024 - Economy

The March jobs report was as good as it gets — here’s why

Data: Bureau of Labor Statistics; Chart: Axios Visuals

If you went into a lab and tried to design the perfect jobs report, you'd have a hard time coming up with something better than the one the Labor Department issued Friday.

Why it matters: The U.S. labor market isn't merely not faltering. Rather, it is getting stronger — but in ways that aren't likely to raise excessive inflation alarm bells at the Federal Reserve.

  • Strong job creation in March coincided with an expanding labor force and moderate wage growth — pretty much an ideal situation for both workers and inflation-wary central bankers and investors.

Driving the news: Employers added 303,000 jobs in March, the strongest in 10 months. January and February figures were revised upwards, affirming that the recent run of strong job growth is no statistical mirage.

  • The three-month average of job growth, 276,000, is the highest it has been in a year, following a dip in the second half of 2023.
  • Meanwhile, the unemployment rate dipped to 3.8% from 3.9%, remaining below 4% for the 26th straight month.

By the numbers: A surge in the labor force was underneath both trends, with 469,000 more Americans working or looking for work. The labor force participation rate rose 0.2 percentage points.

  • Average hourly earnings rose 0.3%, and are up 4.1% over the last year — down from 4.3% annual growth in February — a healthy rate of growth, but not the stuff of upward spiraling prices and wages.
  • The report drove a bond market selloff as traders bet on the hot job market pushing Fed rate cuts further into the future. The 10-year U.S. treasury note was yielding 4.37% at 11:45am ET Friday, the highest since November.

Yes, but: The Fed may not be as alarmed by the job market strength as that market reaction suggests, given that the strength is accompanied by a rising labor supply.

  • Chair Jerome Powell was asked about exactly this scenario last month in a prescient question from the New York Times' Jeanna Smialek about whether strong hiring alone would be a reason to hold off on rate cuts.
  • "No, not all by itself," Powell replied at his news conference. "You saw last year very strong hiring, and inflation coming down quickly. We now have a better sense that a big part of that was supply-side healing."
  • "So, in and of itself, strong job growth is not a reason ... for us to be concerned about inflation."
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