Job Gains Surge and Unemployment Falls in March
The U.S. labor market took another big step toward a full recovery from the massive job cuts early in the pandemic recession as increasing vaccinations and reopening businesses and schools boosted economic activity.
Roughly 916,000 jobs were added by employers in March, according to the Bureau of Labor Statistics (BLS). This volume topped economist’s expectations of about 650,000 jobs. Additionally, January’s job gain of 166,000 was revised up to 233,000 and February’s strong gain of 379,000 was increased to 468,000, for a net increase of 156,000 jobs for the previous two months.
The headline unemployment rate dropped to 6% from 6.2% in February as the number of unemployed continues to contract. However, while the number of unemployed fell by 262,000 from February to 9.7 million, the number of people not in the labor force that currently want a job fell by only 83,000 and is still about 1.4 million higher than last year.
Both the civilian labor force participation rate and the employment-population ratio increased from last month with a 10 basis point (bps) increase in participation to 61.5% and a 20 bps increase in employment-population to 57.8%. Despite improvement, both ratios are about 100-200 bps below last year’s ratios.
In other March BLS data, annual hourly earnings growth for all employees was 4.2%, about 70 bps above the increase in March 2020. Perhaps due to the mounting increases in lower-wage restaurant and hospitality workers this month and last, the monthly wage figure decreased $0.04 between February and March, but was up $1.22 from March 2020, to $29.96.
This month’s surprisingly strong gain in employment made significant headway in eating into the employment deficit the economy experienced at the height of the pandemic lockdowns when more than 22 million workers lost their jobs in March and April of last year. The current shortfall slipped to 8.3 million jobs lost after holding at around 9.6 million for the past four months.
While the headline unemployment rate fell overall, the unemployment rates for those with some college or higher remained virtually unchanged as much of the improvement was in the unemployment rates for those with a high school education or less. In fact, the unemployment rate for workers with less than a high school diploma dropped 190 bps from February to a still elevated 8.2%.
The BLS’s supplemental data measuring the effects of the coronavirus pandemic on the labor market for March indicated that the number of workers that teleworked fell to 21% from 22.7% in February as more businesses open their offices to their employees. About 11.4 million workers were unable to work because their employer closed or lost business due to the coronavirus pandemic, down from 13.3 million last month. However, this is well below the 49.8 million reported in May of last year.
The number of people working part-time that want full-time work has held steady at around six million workers since December while the number of workers who prefer part-time positions has remained near 18 million since November.
The number of unemployed workers on temporary layoff decreased by about 200,000 from February to about 2 million, and the number of permanent job losers is just above 3.4 million. Workers marginally attached to the labor force slipped to just below 1.8 million in March as the number of discouraged workers dipped below 500,000. 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, fell to 10.7% in March compared to 8.8% last March and 22.9% in April.
All but one of the 11 major employment categories experienced job gains in March 2021, and almost a third of the monthly gain was again in just one industry – Leisure and Hospitality. The reopening of classrooms, bars and restaurants, stores, and entertainment venues brought back a lot of the jobs that disappeared during the pandemic shutdowns. Additionally, construction and manufacturing employment was boosted by better weather and increasing consumer demand.
• Food services and drinking places accounted for the lion’s share (+175,800 or 63%) in the Leisure and Hospitality industry’s employment gain of 280,000 jobs this month. However, with many professional and amateur sports leagues resuming play in March, the arts, entertainment, and recreation sector added 64,400 jobs for the month.
• The Government sector’s gain of 136,000 jobs in March was almost all education workers at the state (+49,600 jobs) and local (+76,000 jobs) levels as classroom instruction is opening up. Federal employment increased by only 7,000 workers in March.
• Warmer weather helped the Construction industry resume its growth trajectory, with 110,000 jobs added in March. Almost two-thirds of those jobs were specialty trade contractors (+65,000), while all other industry sectors gained at least 17,000 jobs for the month.
• Unlike earlier in the recovery, the educational services sector of the Education and Health Services industry accounted for the bulk of this month’s 101,000 job gain (+64,400). The health care and social assistance sector added only 36,400 jobs in March with most of that in individual family services (+20,100).
• About half (+47,500) of the Trade, Transportation, and Utilities industry gain of 94,000 jobs in March were in the transportation and warehousing sector as consumers continue to shop online. However, brick and mortar are not dead as retail hiring increased by 22,500 employees last month, with solid gains in motor vehicles and parts (+13,000) and clothing stores (+16,300). Wholesale trade added 23,700 workers, mostly in durable goods (+14,300).
• The Professional and Business Services industry saw a strong gain of 66,000 jobs in March and although more than half was in the lower-paying administrative and waste services sector (+38,500), the higher-paying professional and technical services sector added 27,500 jobs for the month. The temporary help services subsector (+12,900) is still adding jobs but at a slower pace than earlier in the recovery.
• Durable goods manufacturing added 30,000 to the Manufacturing industry’s 53,000 jobs gained in March, primarily in fabricated metal products (+13,700). Nondurable goods manufacturing gains (+23,000) were in the miscellaneous nondurable goods (+7,400) and printing (+5,900) subsectors.
• The Other Services sector had a strong gain of 42,000 jobs in March with a jump of 18,600 jobs in personal and laundry services and an almost equal gain in the repair and maintenance subsector (+18,300).
• The Mining and Logging industry had a very strong month with a gain of 20,000 jobs, almost all of that in the support activities for mining subsector (+19,300). More than 1,000 jobs were lost in the logging sector in March.
• The Financial Activities job gain of 16,000 was largely in the real estate and rental and leasing services (+11,600) sector, although losses in a few subsectors of the finance and insurance (+4,800) sector hid a gain of 11,200 jobs in the insurance carriers subsector. This significant increase was likely the result of dealing with insurance claims related to February’s bad weather.
• The Information industry experienced a net loss of 2,000 jobs for the month with a steep cut of 8,200 jobs in broadcasting cancelling gains in the publishing (+3,100), other information services (+3,000), and motion picture and sound recording (+2,900) subsectors.