The U.S. economy added fewer-than-expected new jobs last month, the Labor Department said Friday, but upward revisions to prior forecasts and a big decline in the headline unemployment rate showed extended strength in the country's labor market.
The Bureau for Labor Statistics said 435,000 new jobs were created in March, with headline unemployment rate falling to a post-pandemic low of 3.6%. The March tally was modestly shy of the Street consensus forecast of 490,000.
The BLS also revised its February jobs addition tally to 750,000 from its original estimate of 678,000.
The BLS noted that wages rose 0.4% on the month, and up 5.6% on the year to $31.73 per hour, a figure that will raise huge questions as to the pace of wage inflation, its extended impact on the broader consumer prices reading. Analysts had expected a month-on-month increase of around 0.4% after they had stalled completely in February.
The wage portion of today's reading could be crucial, as investors may see further suggestions of stagflation (slowing growth with higher inflation) as the U.S. Treasury bond yield curve inverts and GDP forecasts are revised downward.
“The job market is red hot with high employer demand and is continually driving healthy job gains," said Glassdoor’s senior economist Daniel Zhao. "The American economy is in a very difficult position now, with high risk factors accumulating, but today’s jobs report shows a resilience of recovery, and a confidence in continuing to see healthy job growth.”
"This is now the eleventh month of job gains over 400,000 and if the market continues 2022's pace of growth, we will be back to pre-pandemic jobs by June," he added. "Wage growth is likely to stay elevated as workers worry and demand more pay to keep up with inflation."
Futures contracts tied to the Dow Jones Industrial Average were marked 166 points higher while those linked to the S&P 500 and Nasdaq Composite rose 20 points and 68 points respectively.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.95% higher at 98.553 while benchmark 10-year note yields edged higher, to 2.412%, but fell below 2-year notes at 2.422%.
The CME Group's FedWatch is indicating a71.1% chance of a 50 basis point rate hike next month, up from just 16% at the beginning of March, with bets on a follow-on hike of 50 basis points in June pegged at 59.6%.
Earlier this week, payroll processing group ADP said in its National Employment Report, which it compiles with Moody's Analytics, that private sector jobs grew by 455,000 in March, just ahead of the Street consensus forecast of a 450,000 total, with the bulk of the gains from medium and large-sized business in the leisure and hospitality sector.
