U.S. job growth beats expectations in March; wages increase steadily
U.S. employers hired far more workers than expected in March while raising wages, suggesting the economy ended the first quarter on solid ground and potentially delaying anticipated interest rate cuts from the Federal Reserve this year.
Nonfarm payrolls increased by 3,03,000 jobs last month, the Labor Department’s Bureau of Labor Statistics said in its employment report. Data for February was revised slightly lower to show 2,70,000 jobs added instead of 2,75,000 as previously reported.
The economy is outshining its global peers, despite 525 basis points worth of rate hikes from the U.S. central bank since March 2022 to quell inflation. Economists say most businesses locked in lower borrowing costs prior to the Fed’s tightening cycle, providing some insulation from higher rates and allowing them to keep their workers.
Household balance sheets are mostly healthy, helping to support consumer spending. The labour market has also benefited from a rise in immigration over the past year. Easing financial conditions are boosting hiring in interest ratesensitive industries like construction, which should provide a base for job growth even as payroll gains are expected to slow.
Average hourly earnings rose 0.3% in March after gaining 0.2% in the prior month as some weatherrelated distortions faded.
The annual increase in wages slowed to a still high 4.1% in March from 4.3% in February. Wage growth in a 3%3.5% range is seen as consistent with the Fed’s 2% inflation target. Inflation by most measures is running above target.