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The U.S. labor market showed yet more evidence of its resilience Friday, as March’s nonfarm payrolls report once again came in well ahead of expectations.

However, in-line wage growth didn’t do much to temper opinions on inflation amid still-aggressive job expansion, and most experts noted that continued labor strength might continue to stay the central bank’s hand on its benchmark interest rate.

federal reserve

The Labor Department reported Friday that nonfarm payrolls grew by 303,000 in March, easily surpassing economists’ estimates of 205,000. Unemployment, meanwhile, ticked down from 3.9% to 3.8%, in line with estimates. And while February payrolls were revised lower a smidge (-5,000 jobs), January payrolls were revised higher by 27,000 jobs.

Here’s a quick look at the most pertinent details, illustrating a still-robust economy:

  • March payrolls: +303,000 (vs. +205,000 est.)
  • March unemployment: 3.8% (vs. 3.8% est.)
  • March hourly earnings: +0.3% (vs. +0.3% est.)
  • February payrolls (revised): +270,000 (vs. +275,000 previously)
  • January payrolls (revised): +256,000 (vs. +229,000 previously)

It’s great news for American workers, though it’s a potential concern on the inflation front and, as a result, might push an anticipated Fed interest-rate cut even further back.

“The unemployment rate has stayed below 4.0% since March 2022, with 2023 averaging just 3.6%. This prolonged streak indicates a labor market that remains tight,” says Joe Gaffoglio, President of Mutual of America Capital Management. “Some suggest the Fed already achieved a soft landing given this continued strength in the labor market, but sticky inflation above the Fed’s target of 2% means rates will be higher for longer and it may be premature to have called the landing at this point.”

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Digging deeper into the March jobs report …

Health care’s jump of 72,000 jobs in March was above its average monthly gain of 60,000 jobs from the past year. Governmental employment also exceeded its monthly average, clocking in at 71,000 (vs. +54,000 over the trailing 12 months). Leisure and hospitality not only added 49,000, but finally eclipsed its pre-pandemic highs set in February 2020—and it too surpassed its monthly average of 37,000.

There were few noteworthy declines, but building material and garden equipment and supplies dealers lost 10,000 jobs, while automotive parts, accessories, and tire retailers lost 3,000 jobs.

“Average hourly earnings grew 0.3% month-over-month and 4.1% year-over-year, in line with expectations and quite similar to the average wage gains experienced in the first two months of the year,” says Jason Pride, Chief of Investment Strategy and Research at Glenmede. “A key focal point for the Federal Reserve has been persistent inflation in services excluding shelter, which is closely related to wage gains since a large portion of the input costs to services is worker compensation. Consistent wage gains, while not red-hot, suggest that inflation may no longer be cooling.”

Expert Reactions to March’s Jobs Report

Here’s what strategists, financial managers, and other experts had to say about the March employment situation:

Sonu Varghese, Global Macro Strategist, Carson Group

“Another blowout payroll report suggests the economy is running strong and far from recession, with the economy averaging 276,000 job growth per month over the last quarter and unemployment rate at 3.8%. On balance, this would push out any rate cuts by the Fed, but easing wage growth means we’re not in the middle of a labor-market induced inflation surge.

“Ultimately, the inflation data is what matters, and if inflation pulls back in March and April, a strong labor market will not prevent a rate cut as early as June.”

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Josh Jamner, Investment Strategy Analyst, ClearBridge Investments

“The combination of continued strong job creation along with an improvement in the household survey data (which had been softer lately) makes this jobs report hard to characterize as anything other than “hot.” Reconvergence between the household and establishment survey data suggests that some of the potential sticking points in the jobs data are resolving favorably. The household survey data came in even stronger than the establishment survey data, with 498,000 jobs created, which helped drive the unemployment rate down to 3.8% even as labor force participation rose (a positive).”

Alexandra Wilson-Elizondo, Co-Chief Investment Officer for Multi-Asset Solutions, Goldman Sachs Asset Management

“There were many market participants who believed that today’s jobs data release had been “de-risked” by Chair Powell’s March comments that highlighted a desire to look through seasonality and implied a strong labor market did not warrant a delayed cutting cycle. However, given the hawkish tone out of recent Fed speakers and the run-up in commodity prices, there was a lot riding on this print to come in-line with expectations. It did not. The above expectation headline number of 300k+ shows that there is still strength in the labor market. That said, it is no longer overheating given average hourly earnings was in line and that participation rate ticked up slightly.

“We still believe that the Fed will begin insurance cuts later this year to make the soft landing a reality. Especially given that some of the recent data away from payrolls has shown a decline in macro momentum.”

Jason Pride, Chief of Investment Strategy & Research at Glenmede

“Generally, the labor market remained resilient in the face of what should be the peak economic impact of rate hikes in 2024, widening the soft landing’s runway in the U.S. While this is likely reassuring to the Fed that their approach so far has been correct, the Fed is unlikely to feel completely relieved of their responsibilities as inflation has remained resilient as well and wage gains are a contributing factor to that situation.

“On the whole, this report doesn’t by itself alter the Fed’s rate cut plan, but along with other information could be used to argue for only two cuts in 2024, instead of the currently expected three cuts.”

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Joe Gaffoglio, President, Mutual of America Capital Management

“Throughout 2024, the labor market has been resilient, and today’s jobs report keeps that trend going. Even after the downward revisions to recent reports, this report underscores the strength of the job market within the broader context of a U.S. economy that has continued to be largely resistant to the effects of higher rates.

“Despite expectations at the start of the year for interest rate cuts to begin in March, Fed Chair Jerome Powell’s recent remarks reiterated that the Fed has to be confident in the trajectory of inflation before making any policy adjustments. The ongoing strength of the labor market, coupled with inflation persisting above the Fed’s 2% target, is likely to uphold Powell’s cautious approach to monetary easing.”

David Russell, Global Head of Market Strategy, TradeStation

“The economy is strong and getting stronger, consistent with some of the recent data. Still, the higher participation rate suggests we could be in the process of supply and demand coming into better balance. A June rate cut might be at risk, but next week’s CPI number will probably be a bigger litmus test for the Fed. The bears haven’t won yet.”

Michelle Cluver, Head of ETF Model Portfolios, Global X

“Although the hotter-than-expected print raises questions about the timing for the Fed’s first interest rate cut, continued labor market strength remains encouraging for the economy. Additionally, wage pressure came in line with expectations, proving some comfort in a hot report.”

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Kyle Woodley is the Editor-in-Chief of WealthUp. His 20-year journalistic career has included more than a decade in financial media, where he previously has served as the Senior Investing Editor of Kiplinger.com and the Managing Editor of InvestorPlace.com.

Kyle Woodley oversees WealthUp’s investing coverage, including stocks, bonds, exchange-traded funds (ETFs), mutual funds, real estate, alternatives, and other investments. He also writes the weekly Weekend Tea newsletter.

Kyle spent five years as the Senior Investing Editor at Kiplinger, and six years at InvestorPlace.com, including two as Managing Editor. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, the Nasdaq, Barchart, The Globe and Mail, and U.S. News & World Report. He also has made guest appearances on Fox Business and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice, and Univision.

He is a proud graduate of The Ohio State University, where he earned a BA in journalism … but he doesn’t necessarily care whether you use the “The.”

Check out what he thinks about the stock market, sports, and everything else at @KyleWoodley.