US Added 236,000 Jobs in March 2023, Underscoring Tightening Labor Market

3 minute read

US employers added jobs at a healthy pace last month, while unemployment hit historic lows, reinforcing the labor market as a bright spot in the economy, as the Federal Reserve seeks to reduce inflation by gradually raising interest rates. K's campaign started cooling down.

Some 236,000 jobs were added in March, the Bureau of Labor Statistics (BLS) reported on Friday, in line with an estimate of 240,000.

Total payrolls rose to 155.6 million compared to 152.4 million just before the pandemic. About 4.2 million jobs have been added since the Fed started raising rates a year ago.

The unemployment rate fell to 3.5%, the lowest level in half a century. The labor force participation rate, which tracks the percentage of the working-age population either employed or looking for work, rose to 62.6%, its highest level since the pandemic. At 60.4%, the employment-to-population ratio is now at its highest level since February of 2020.

"Job growth will slow, but remain resilient,"

Daniel Zhao, principal economist at company ratings firm Glassdoor, said ahead of the report. Still, a recession can bring rapid change, and the recent stress in the banking system will bring "pain to small and medium-sized businesses and their ability to pay rent."

Today's jobs report presents a dilemma for Fed officials. While annual wage growth has slowed, keeping a lid on inflation, the labor market remains surprisingly tight with unemployment at a half-century low. As a result, Fed officials may prefer a more accommodative monetary policy stance in the coming months. Fed funds futures tracked by CME Group now show a 70% chance of a 25 basis point hike at the next FOMC meeting in May, resulting in a federal funds rate between 5% and 5.25%.

Median hourly earnings for private sector workers rose 0.3% to $33.18, following a 0.2% increase in February. Year-to-date, they rose 4.2%, down from 4.6% in February and marking the slowest annual increase since June of 2021. Slow wage growth helps keep inflation under control, suggesting that higher rates are having the Fed's intended effect.

US stock futures erased losses, while bond yields rose as traders welcomed data suggesting a resilient economy. In the brief holiday trading session, S&P 500 futures were slightly in the green and the yield on 10-year Treasury notes rose to 3.35%.

Key TakeAways
US employers added 236,000 jobs in March, beating the estimate of 240,000.
Unemployment fell to 3.5%, a half-century low, while the labor force participation rate rose to its highest level since the pandemic.
Wages for private-sector workers rose 0.3% from February and rose 4.2% year-over-year, the slowest annual increase since June of 2021.
By sector, gains were greatest in leisure and hospitality, government, professional and business services and health care, while retail trade lost jobs.
Fed officials could raise interest rates at their next policy meeting in May, amid a firming labor market. {alertSuccess}

Profit by Sector

Gains were again led by the leisure and hospitality sector, which added 72,000 positions, driven by a 50,000 gain at food services and drinking venues. This was still less than the average monthly gain of 95,000 in the previous six months. Employment in this sector is still 2.2% below its pre-pandemic level.

Government employment increased by 47,000 in line with the average monthly gain in the last six months. Professional and business services added 39,000 jobs, with an increase of 26,000 in professional, scientific and technical services. Health care added 34,000 positions, led by home health care services (+15,000), hospitals (+11,000), and residential care facilities (+8,000).

Other sectors that posted modest gains included social assistance (+17,000) and transportation and storage (+10,000). mining, quarrying, and oil and gas extraction; Manufacturing, construction, wholesale trade, information and financial activities registered little change from February. Retail trading lost 15,000 jobs, led by a decline in home goods, electronics and appliance retailers (-9,000).