Jobs are expected to rise by 490,000 as employment inches approach pre-pandemic levels

The US economy posted another big payroll gain in March as the labor market extended its strong and rapid recovery to bring employment closer to pre-pandemic levels.

The Ministry of Labor issued a file Jobs report for the month of March Friday at 8:30 a.m. ET. Here are the key metrics from the print edition, compared to consensus estimates compiled by Bloomberg.

• Non-farm jobs: +431,000 vs. +490,000 forecast and +750,000 expected in February

• Unemployment rate: 3.6% vs. 3.7 expected and 3.8% in February

• Average hourly wage, on a monthly basis: 0.4% vs. 0.4% expected and 0.1% upwardly revised in February

• Average hourly wage, on an annual basis: 5.6% vs. 5.5% expected and 5.6% upwardly revised in February

The closely watched jobs report for March saw payrolls come in lower than expected but still represent the 15th consecutive month of expansion for the US workforce. Economists polled by Bloomberg expected jobs to rise by 490,000, according to consensus data. At 678,000, the February jobs report reflected a stunning bullish surprise for investors, with salaries rising 255,000 more than experts had expected at the time. In Friday’s report, job gains in the previous month were also revised upwards to show 750,000 jobs were added or created.

It will be difficult to match the 678,000 jobs added in February, but even so, expectations were for salary growth to be north of 400,000 jobs, Bankrate chief economist Mark Hamrick said.

Data in the past several months has reflected continued momentum in the labor market recovery even as Omicron’s surge in COVID-19 cases has reduced demand for workers, particularly in the highly connected services sector. The unemployment rate fell to 3.8% in February, reaching its lowest level since before the virus emerged and sent the US economy up. Notably, the improvement in the unemployment rate came even as labor force participation unexpectedly rose to 62.3%. Consensus economists expect the unemployment rate to fall further to 3.7% in March.

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“If a drop in the unemployment rate is observed, it would be a new low pandemic,” Hamrick said. “How many people who have joined the workforce will be part of the equation.”

JoAnne Feeney, partner at Advisors Capital Management and portfolio manager, told Yahoo Finance Live that although any reading in the upper 400,000 range would be considered positive, there are still very few people looking for jobs.

“The real thing we’re focusing on is workforce participation. Are we getting more workers to come back?” She said. “That’s the biggest limitation right now to the economy continuing to grow, because there aren’t enough people to take on these jobs, so I think getting them back into the workforce would be the best indication of how much growth we have.”

The labor shortage has been a major challenge, not only for US employers struggling to find enough labor to meet demand as millions of Americans remain on the margins of the workforce, but also for the Federal Reserve as it tries to achieve its core economic goals of maximum employment and price stability.

This tightening in the labor market was a strong inspiration for the central bank’s decision to rein in monetary policy, as officials’ economic strength suggests that the US economy could weather less accommodative financial conditions.

“The Fed has a dual mandate to boost employment and stabilize prices,” Ted Rossman, senior industry analyst at Bankrate, said in a note. “A strong labor market is leading the Fed to focus squarely on combating high inflation. Fed Chairman Jerome Powell recently hinted at a more aggressive pace of rate hikes, and this report fits that narrative because inflation is a much greater concern than unemployment at the time. Present “.

Powell admitted in his recent testimony before the House Financial Services Committee That while the demand for labor is strong, and labor participation is increasing, the supply of workers remains weak.

“As a result, employers are struggling to fill jobs, an unprecedented number of workers are left to take on new jobs, and wages are rising at their fastest pace in many years,” Powell said.

Although average hourly wage growth slowed in February, wages have risen well above pre-pandemic trends, and in turn have contributed to much of the inflationary pressures building up across the US economy.

Bank of America noted in a recent note that in the midst of a labor market recovery there is a higher level of job opportunities available for any given unemployment rate than in the previous history. As a result, the short-term inflation-neutral unemployment rate (NAIRU) may be higher than long-term estimates, implying increased wage and price pressures in the near term, according to the bank.

Earlier this week, the Department of Labor’s JOLTs (Job Openings and Employment Turnover Summary) report showed Total vacancies totaled 11.266 million, down modestly from a record high but still far outstripping new hires..

“The pandemic labor market has seen an unusual outward shift in the Beveridge curve (the relationship between unemployment and the vacancy rate), indicating the difficulty of matching workers to jobs,” Bank of America economists said in a recent note. “This mismatch may reflect higher spending on goods and thus a shortage of workers in the hotter part of the economy.”

Friday’s unemployment numbers are expected to build on that trend, as policy makers seem to embrace the possibility of a more aggressive rate hike, with several Fed officials in recent weeks – including Powell – suggesting a 50 basis point hike It is on a table.

“The jobs report may be the largest yet in this pandemic recovery,” Christopher Robke, chief economist at FWDBONDS, said in a recent note. “Fed officials are already grumbling about a 50 basis point interest rate hike in upcoming meetings, and the tightest labor market since the 1960s is like pouring gasoline on a fire as any political official worth their salt burns with a desire for interest rates as high as 2% neutral now.”

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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed

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