The Jobs Report – March 2023

Highlight

In March, the economy added 236K jobs, slightly ahead of the consensus estimate of 230K. This is a decrease from last month’s revised gain of 326K. Private payrolls grew by 189K, down from the previous month’s revised gain of 266K.

What you need to know:

• The unemployment rate decreased from 3.6% to 3.5%. The household survey used in the unemployment rate showed a gain of 577K jobs for March.
• The strongest job growth was again leisure and hospitality, with a gain of 72K jobs. Retail trade was the weakest, with 15K jobs lost. Sectors that produce goods lost 7K jobs. The private service sector gained 196K jobs, down from last month’s gain of 255K. This mirrors what is happening with inflation as goods inflation is moderating while services prices remain strong.
• Although the jobs market remains strong, earnings growth continues to moderate, with year-over-year earnings increasing at 4.2%, down from last month’s 4.6% increase. Importantly for the Fed, wage growth doesn’t show signs of overheating and contributing to inflationary pressures. As in prior months, wage growth continues to lag inflation.
• Overall the March jobs report was solid, with good job and wage growth, but it is showing signs of slowing moderately as the Fed rate hikes of the past year start to slow economic growth. Some leading economic indicators show a more pronounced slowdown that should affect the jobs report in the coming months. The market expects the Fed to hike rates by 25 bps at its May meeting. We believe nothing in this report gives the Fed reason to refrain from hiking rates again, but we expect that they may pause the rate hikes after May.