In March, the United States added over half a million jobs, and the unemployment rate fell by more than predicted, indicating a strong labour market that will likely sustain rapid Federal Reserve tightening in the months ahead.
According to a Labor Department report released on Friday, nonfarm payrolls grew 431,000 in March following an upwardly revised 750,000 rise in February (Apr 1). The unemployment rate dropped to 3.6%, close to its pre-pandemic level, and the labour force participation rate increased. Wage increases have accelerated.
Data indicate that the labour market is regaining steam at a robust pace, as employers are more successful in filling job openings than ever before.
Inflation, dwindling surplus family savings, and steady wage growth are all factors that might encourage more Americans to seek employment in the coming months.
In recent weeks, Fed officials, including Chair Jerome Powell, have stated that they support more aggressive monetary policy to combat decades-high inflation, including a possible 50-basis-point raise at the May policy meeting.
A healthy labour market has been cited by central bankers as one reason why the US economy can withstand a sequence of interest rate rises that is projected to continue into next year.
According to the statistics from Friday's report, average hourly wages increased by 0.4% in February and 5.6% from a year earlier, the highest level since May 2020. Inflation, which is at its highest level since the early 1980s, is exceeding wage growth, thereby denying many Americans a raise and dampening consumer demand.