Surprisingly Strong March Non-Farm Payroll Report

The recent release of the non-farm payroll report for March has left many surprised, as the data shows stronger employment numbers than anticipated. This comes despite a weaker ADP report, higher than expected jobless claims, and both ISM Services and Manufacturing indicating more weakness than anticipated.

Overview of the Non-Farm Payroll Report

Total non-farm payroll employment rose by 236,000 in March, while the unemployment rate remained steady at 3.5%. Notable employment gains were observed in leisure and hospitality, government, professional and business services, and health care.

Household Survey Data Highlights

The unemployment rate for Hispanics decreased to 4.6%, offsetting the increase in the previous month. The labor force participation rate continued to trend upward, reaching 62.6% in March, with the employment-population ratio increasing slightly to 60.4%. However, both measures remain below their pre-pandemic February 2020 levels.

Establishment Survey Data Highlights

The non-farm payroll employment increased by 236,000 in March, with significant job growth in leisure and hospitality, government, professional and business services, and health care. The average hourly earnings for all employees on private non-farm payrolls rose by 9 cents, or 0.3%, to $33.18.

Implications for the Economy

The strong non-farm payroll report for March defies the weaker economic indicators that we saw over the course of this week. This data could signal further resilience in the labor market, even as other economic factors, such as the JOLTS and ADP report, jobless claims, and ISM data, show growing vulnerability.

It also gives the Fed cover to raise by 25 bps in May, which is now being priced in with stronger odds, up to about 67% from being about a coin toss yesterday.