The Employment Situation in March
According to today’s jobs report, the economy added 236,000 jobs in March, for an average monthly gain of 345,000 over the past three months. The number of jobs added in March came in at about market expectations. Employment growth in January and February was revised down by a combined 17,000 jobs.
The unemployment rate edged down to 3.5 percent. Labor force participation was 62.6 percent, a tick above February’s report. The participation rate for 25-54 year-olds held steady at 83.1 percent, a tick above the pre-pandemic February 2020 level. Monthly nominal wages grew 0.3 percent in March; nominal wages have risen by 4.2 percent over the last year.
1. Average monthly job growth over the last three months was 345,000, a slowdown from the average at the end of 2021, though still a solid pace.
Job growth in January, February, and March averaged 345,000 jobs per month (Figure 1), an increase from the 284,000 pace in the prior three months of October, November, and December, and a slowdown from January 2022 through March 2022. Since monthly numbers can be volatile and subject to revision, the Council of Economic Advisers prefers to focus on the three-month average rather than the data in a single month, as described in a prior CEA blog.
2. Year-over-year nominal wage growth decelerated from February.
Nominal average hourly earnings growth ticked up to 0.3 percent over the month, following growth of 0.2 percent in February (Figure 2). Three-month average wage growth was 3.2 percent annualized in March, substantially lower than the 5.3 percent average over the same three months last year, and lower than it was over 2022. Year-over-year, nominal wage growth ticked down to 4.2 percent, the lowest rate since March 2021. We do not have the inflation report for March yet, which will include real wage growth.
3. Labor force participation rates for workers aged 16 and over and prime-age (25 to 54) workers have seen substantial recovery from their pandemic lows.
The labor force participation rate for workers aged 16 and over was 62.6 percent in March, a new pandemic recovery high. Participation for prime-age workers, which is less sensitive to school enrollment and the aging of the population and so is preferred by many economists, held steady at 83.1 percent, a tick above the pre-pandemic participation rate. Both measures have seen substantial recovery from their pandemic lows. Overall, the growth in labor force participation has been robust in this recovery compared to past recoveries.
4. The unemployment rate in March was near historic lows at 3.5 percent, and the unemployment rate for Black workers reached the lowest on record.
The overall unemployment rate ticked down to 3.5 percent. For Black workers, the unemployment rate was 5.0 percent, a record low since the series began in 1972. The unemployment rate declined for Hispanic/Latino workers, ticked down for Asian workers, and held steady for white workers.
5. Job growth in March was relatively broad-based across industries, but there were notable declines in the Construction and Retail Trade sectors.
Job gains in March were relatively broad-based, but were especially strong in the Leisure & Hospitality and Private Education & Health Services sectors, which grew by 72,000 and 65,000 jobs, respectively. There were notable declines in employment in the Construction and Retail Trade sectors.
As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report, and it is informative to consider each report in the context of other data as they become available.
