March 2022 Jobs Report
by Anirban Basu
April 1, 2022
U.S. payroll employment expanded by 431,000 in March. That’s about 60,000 fewer than the consensus forecast of 490,000, but make no mistake, this is still good news. Combined revisions to January and February estimates added an additional 95,000 jobs, continuing a streak of upward revisions. Somehow, this economy continues to plough through inflation.
Since 2021’s onset, we’re averaging 562,000 new jobs each month, and we’ve now recovered 93% of the jobs lost during the first two months of the pandemic. If the current pace of hiring holds steady, we should reach full recovery by the start of the third quarter.
But that’s a big if.
The Fed has started raising rates (we put out a primer on the subject earlier this week), inflation is running too high, and there’s still some pretty serious geopolitical risks out there. The consensus is that the Federal Reserve will raise rates by 50 basis points at both of their next two meetings. The yield curve has inverted. All of this suggests that recession risks are rising, though they remain small in the near-term.
The labor force has grown by 2.1 million during the first three months of the year, and the labor force participation rate ticked up to 62.4% in March, but demand for labor is still way higher than the supply. The unemployment rate fell from 3.8% to 3.6% in March, which is bad news in the context of worker shortages. As of February there were just 0.56 unemployed workers per job opening, and that ratio will likely fall when March’s data are published (job openings are tracked by a different survey).
Average hourly earnings rose 0.4% in March and are up 5.6% year over year. That’s pretty rapid wage growth but is still lower than inflation (CPI-U is up 7.9% over the most recent year), meaning average real wages are actually declining. That will keep the workforce pressing aggressively for higher pay, and with skills and labor shortages characterizing the employment market presently, that translates into additional wage gains going forward. That will help support economic activity during the months to come, though it will also trim profit margins all things being equal.
At the industry level, the industries hit hardest by the pandemic posted the biggest gains for the month, with restaurants and bars adding 61,300 jobs and retail adding 49,000 jobs. Most industries added jobs for the month, although the residential building category actually lost 2,600 jobs. That’s a pretty small decline and could definitely be statistical noise, but with mortgage rates surging and home prices already sky-high, this could be the first sign of a slowdown in housing construction. For the moment, it’s too soon to say for sure. As always, you can read my in-depth thoughts regarding the construction industry’s labor market at Associated Builders and Contractors.
Three (somewhat) Key Takeaways
Americans 65 and older rejoined the labor force at a decent clip in March, and the participation rate for those oldest Americans increased from 23.1% to 23.6%. The unretirement rate is rising—Tom Brady isn’t the only one coming out of retirement.
The number of married men (spouse present) with jobs declined in March, while the number of married women (spouse present) increased for the month. Count this as a win for women’s rights, the video game industry, and marijuana.
State government was virtually the only category that lost jobs for the month, and excluding education, state government employment is down by about 74,000 jobs (-3%) since March 2021.
What to Watch
Can Ukraine continue to push Russia back? Can the Fed navigate a soft landing? How high will inflation go? Where will the U.S. land in the World Cup draw?
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