US hiring stays robust as jobless rate falls, wages pick up

New York

THE United States added close to half a million jobs in March and the unemployment rate fell by more than expected, highlighting a robust labour market that's likely to support aggressive Federal Reserve tightening in the coming months.

Nonfarm payrolls increased 431,000 last month after an upwardly revised 750,000 gain in February, a Labor Department report showed on Friday (Apr 1). The unemployment rate fell to 3.6 per cent, near its pre-pandemic low, and the labour force participation rate ticked up. Wage gains accelerated.

The median estimate in a Bloomberg survey of economists called for a 490,000 advance in payrolls and for the unemployment rate to fall to 3.7 per cent.

The data suggest that the labour market recovery is continuing at a robust pace as employers have better success filling a near-record number of positions.

Inflation, shrinking excess household savings and solid wage growth are factors that could attract more Americans to jobs in the coming months. Covid has also become less of a factor as states broadly lift restrictions.

Fed officials, including Chair Jerome Powell, have said in recent weeks that they would support more aggressive monetary policy to curb decades-high inflation, including a possible 50-basis-point hike at the next policy meeting in May.

Central bankers have repeatedly pointed to a strong labour market as one reason that the US economy can handle a series of interest rate hikes that's expected to extend into next year.

Friday's report showed average hourly earnings rose 0.4 per cent from February and 5.6 per cent from a year ago, the most since May 2020. However, inflation - at the highest since the early 1980s - is outpacing wage growth, effectively dealing a pay cut to many Americans and starting to dent consumer demand.

Leisure and hospitality accounted for a quarter of the payroll gains. Professional and business services, retail trade and education and health services also posted solid advances.

The labour force participation rate - the share of the population that is working or looking for work - edged higher to 62.4 per cent, and the rate for workers aged 25-54 rose to a two-year high. BLOOMBERG