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Job Gains in March Come in Below Expectations

Job Gains in March Come in Below Expectations

The U.S. economy added fewer jobs in March than economists predicted as the labor market continues to tighten.

Roughly 431,000 employees were added to payrolls in March 2022, according to the Bureau of Labor Statistics (BLS). This was below the roughly 490,000 jobs forecast by experts. Revisions to January and February added another 95,000 jobs than were previously reported. Since October 2020, an average of about 516,000 jobs have been added each month, with the March job gain coming in below that level.

The bulk of March’s new jobs (26%) were in the lower-paying Leisure and Hospitality Services industry (+112,000), followed by gains in the higher-paying Professional and Business Services segment (+102,000). Solid contributions were also made in the Trade, Transportation and Utilities (+54,000) and Education and Health Services (+53,000) sectors.

The unemployment rate (U3 or headline unemployment rate) fell to 3.6% in March, the lowest level since the onset of the pandemic. That recent reading was down 20 basis points (bps) from the February rate of 3.8% as the number of unemployed fell from 6.27 million in February to 5.95 million in March. The civilian labor force participation rate increased for the third consecutive month, moving from 62.3% to 62.4%. Still, the rate was well below pre-pandemic levels which averaged 63.1% in 2019. The employment-population ratio also improved, inching up to 60.1% in March from 59.9% in February.

The unemployment rate for adult men decreased 10 bps from February to 3.4% in March, while the rate for adult women declined 30 bps month-over-month to 3.3%. The unemployment rate for teenagers fell 30 bps from February to 10.0% as the majority of job gains for March were in the Leisure and Hospitality Services sector.

Despite the influx of lower-paying service jobs in March, average hourly earnings rose $0.13 during the month, in line with the average increase over the past 12 months. That monthly increase took average hourly earnings to $31.73 in March, the sixth consecutive month above $31. On an annual basis, average hourly earnings were up $1.67, a 5.6% increase year-over-year. However, wages were outstripped by inflation, as the Consumer Price Index (CPI) rose 7.9% in the year-ending February. The war in Ukraine has many concerned that energy prices will continue to climb going forward.

Industry wage growth varied greatly, with Leisure and Hospitality Services wages jumping nearly 12% for the year, while Information employees registered a 2.5% annual increase. Competition for fewer restaurant and other service workers has had a dramatic effect on wage growth. Transportation and warehousing workers enjoyed a 7.9% annual increase in hourly wages. Professional and Business Services employees posted a 6.6% year-over-year increase, while Retail Trade wages were up 6.5%. Most other industries averaged a 4.5% increase.

Across major industries, unadjusted unemployment rates generally fell from February to March. The biggest declines were in Mining and Logging (down 240 bps to 2.6%) and Information (down 140 bps to 2.3%). Most other major industries saw unemployment rates decline 30 to 70 bps. The exceptions were the Manufacturing, Transportation and Utilities, and Professional and Business Services, where unemployment rates were essentially unchanged month-over-month. The highest industry unemployment rate (not seasonally adjusted) in March was in Construction (6%), followed by Leisure and Hospitality Services (5.9%) and Transportation and Utilities (5.1%). The lowest unemployment rate was in the Government sector (1.5%).

The percentage of workers that telework continued to fall in March as the effect of the Omicron variant diminishes. March’s teleworking rate of 10% was below the 13% rate recorded in February, according to the BLS’s supplemental data measuring the effects of the coronavirus pandemic on the labor market. Still, the rate of telecommuting will likely continue to remain elevated compared to historical norms as employers discover that remote working can act as a hiring and retention inducement that boosts employee morale while productivity remains close to previous levels.

In other March BLS data, the number of unemployed persons that quit or voluntarily left their previous job to begin looking for new employment fell from 963,000 in February to 787,000 in March. The number of unemployed for 27 weeks or longer also decreased, from 1.7 million in February to 1.43 million in March. The number of those working part-time that would prefer to work full-time rose by 35,000 from February to about 4.17 million in March, while the number of workers who prefer part-time positions increased by 203,000 to nearly 20.9 million.

Workers marginally attached to the labor force fell by about 111,000 from February to 1.36 million in March, while the number of discouraged workers stood at 373,000, down 18,000 month-over-month. Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months.

The U6 unemployment rate, which includes part-timers for economic reasons and marginally attached workers, dropped to 6.9% in March compared to 7.2% the previous month and 10.7% a year earlier.

Jobs by Industry

Just like February, the service elements of the economy continued to dominate the jobs recovery, with the bulk of March’s gain in the Leisure and Hospitality Services, Professional and Business Services, Trade, Transportation and Utilities, and Education and Health Services industries. As states, cities and counties ease or end indoor mask mandates, patrons are returning to a more normal lifestyle by shopping, dining, and attending entertainment and sports events. The goods-producing industries also continued to add jobs in March, with solid gains in Manufacturing, Construction, and even Mining and Logging.

• Nearly 55% of the Leisure and Hospitality industry’s monthly gain of 112,000 jobs were in food services and drinking places (+61,300) with another 25,000 jobs added in the accommodation subsector. The arts, entertainment and recreation sector added 25,900 jobs for the month, with 16,400 of those in the amusements, gambling and recreation subsector. Despite the recent job additions in Leisure and Hospitality Services, employment in this sector is still down by nearly 1.5 million workers or 8.7% compared to the pre-pandemic level from February 2020. 

• The Professional and Business Services industry gained 102,000 jobs in March with more than half of those in the professional and technical services sector (+59,900), mostly in accounting and bookkeeping services, management and technical consulting services, and computer systems design and related services. The lower-paying administrative and waste services sector added 38,400 jobs. The services to buildings and dwellings subsector accounted for 22,100 of those jobs. Employment in Professional and Business Services is 723,000 higher than in February 2020. 

• The Trade, Transportation and Utilities industry added 54,000 jobs in March with the largest portion in retail trade (+49,000), led by general merchandise stores (+19,800) and food and beverage stores (+17,800). Wholesale trade added 7,000 jobs for the month with durable goods accounting for 6,800 positions. Utilities was down 1,200 jobs for the month, with transportation and warehousing (-500) also losing jobs.

• The Education and Health Services industry’s monthly gain of 53,000 jobs were largely in the health care and social assistance sector (+33,300), with much of that gain in social assistance dominated by individual and family services (+17,600). On the other hand, job losses were recorded in nursing and residential care facilities (-4,000). Meanwhile, the educational services sector added 20,100 jobs in March. 

• The Manufacturing industry’s gain of 38,000 jobs in March was fairly split between durable (+22,000) and nondurable (+16,000) goods. Among durable goods, strong gains were recorded in transportation equipment (+10,800), while notable job losses were seen in nonmetallic mineral products (-4,500). Job gains in nondurable goods manufacturing were mainly in chemicals (+7,200).

• The Construction industry added 19,000 jobs in March, with a gain of 13,900 jobs in specialty trade contractors – both residential and nonresidential. Heavy and civil engineering construction added 5,000 jobs during the month, while job change was flat in the construction of buildings subsector. 

• The Financial Activities industry added 16,000 jobs in March with much of that gain coming from real estate and rental leasing (+13,700). The finance and insurance sector added just 2,000 jobs to the total for the month.

• The Information industry added 16,000 jobs in March, with more than half of those gains in the motion picture and sound recording industries (+8,400) sector. Other information services (+6,300) had a solid contribution as well. 

• The Other Services sector had another solid month with 13,000 jobs added in March. The largest contribution to that total was from the membership associations and organizations subsector, which added 4,800 jobs. Personal and laundry services added 4,400 jobs and the repair and maintenance subsector added 3,800 jobs for the month. 

• Job cuts in State (-14,000) and Federal Government (-1,000) offset increases in Local Government (+20,000), with the overall Government sector adding just 5,000 jobs in March. Most of the jobs in the Local Government sector occurred in the local government education subsector which contributed 16,400 jobs. Another 3,400 jobs were added to local government employment, excluding education.

• The Mining and Logging industry gained 3,000 jobs in March, with most of that gain in the support activities for mining subsector (+2,100). Oil and gas extraction was down 400 jobs for the month.