US Adds 303,000 New Jobs in February as Unemployment Rate Remains Below 4 Percent

A hiring sign at a grocery store in Ellicott City, Md., on March 24, 2024. Madalina Vasiliu/The Epoch Times

The U.S. economy added a higher-than-expected 303,000 new jobs in March, while the unemployment rate was still below 4 percent, according to the Bureau of Labor Statistics (BLS). The labor market continues to remain resilient in a climate of high-interest rates and above-trend inflation.

February job gains were revised down by 5,000 to 270,000. The January numbers were adjusted higher by 27,000, but the downward revisions still totaled 97,000.

Economists had projected 200,000 positions in March.

The unemployment rate dipped to 3.8 percent in March, down from 3.9 percent. The consensus estimate was 3.9 percent.

Employment gains were concentrated in health care (72,000), government (71,000), leisure and hospitality (49,000), and construction (39,000). Manufacturing did not add any new jobs last month.

Average hourly earnings rose 0.3 percent monthly, up from an upwardly adjusted 0.2 percent, in line with market expectations. Year-over-year, they eased to 4.1 percent.

The labor force participation rate surged to 62.7 percent, up from 62.5 percent. Average weekly hours edged up from 34.3 to 34.4.

BLS data highlighted that part-time jobs surged while full-time employment continued to slide.

The number of people working two or more jobs surged to 8.476 million, up from 8.259 million in the previous month. Additionally, the numbers of people employed part-time for economic reasons and not in the labor force who currently want a job were little changed.

Foreign-born workers climbed from 29.848 million in March 2023 to 31.114 million in March 2024. U.S.-born workers maintained a downward trend, falling from 130.893 to 130.242 million in the one-year span.

Market Reaction

The leading benchmark indexes were little changed following the March jobs report.

U.S. Treasury yields popped after the employment data, with the benchmark 10-year yield rising above 3.7 percent. The 2-year yield rocketed above 4.7 percent, while the 30-year bond advanced to 4.53 percent.

The U.S. Dollar Index (DXY), a measurement of the greenback against a basket of currencies, soared above 104.50.

Market watchers have noted that the stronger-than-expected jobs report might force the Federal Reserve to delay its first cut to interest rates. If inflationary pressures are reaccelerating but economic conditions remain solid, why pivot on monetary policy?

“In the short term, this will fuel fears of further inflationary pressures leading the Fed to hike again. In the mid term however, this is one more sign of a healthy economy that’s not showing signs of recession,” said Giuseppe Sette, the president of Toggle AI, in a note.

“Another blockbuster NFP [non-farm payroll] puts the doves on the back foot once more. When the job market is so strong and inflation is resilient, why should the Fed cut at all?”

Bryce Doty, the senior vice president and senior portfolio manager at Sit Investment Associates, is cautious about the March jobs data.

“Incredibly strong jobs data puts the bond market in panic mode over Fed cuts being delayed,” he said. “I keep scratching my head wondering why so many people are deciding to get jobs now when millions of job openings have been available for at least a couple of years. It’s not as though the economy suddenly produced these jobs. So people joining the workforce now must need the jobs.”

“As a result, I’m cautious about how strong the jobs data really is for the economy,” Mr. Doty added.

Still, he is expecting a quarter-point rate cut in the third quarter and a half-point drop in the fourth quarter.

According to RedBalloon CEO and labor market expert Andrew Crapuchettes, investors can cancel any bets on rate cuts this year.

“While the number of new jobs rose, so too did the pressure on the Fed to skip rate cuts this year,” said Mr. Crapuchettes. “Most small business owners no longer believe the Fed will cut rates this year. The March jobs may just be confirming that sentiment.”

A Snapshot of the US Labor Market

Heading into the monthly jobs report is a plethora of labor metrics to gauge the health of overall employment.

The BLS published the February results of its monthly Job Openings and Labor Turnover Summary (JOLTS) report that showed the number of employment vacancies was little changed at 8.756 million. This was roughly in line with market expectations. The January reading was significantly revised down by 115,000 to 8.784 million.

Job quits increased by 38,000 to 3.484 million in February. January’s figure was adjusted higher by 61,000 to 3.446 million.

Payroll processor ADP reported that the private sector added 184,000 jobs in March, topping the consensus estimate of 148,000. The latest findings from the National Employment Report highlighted the largest number of job gains in eight months, driven by the services sector (142,000).

Nela Richardson, the chief economist at ADP, noted that a notable component of the report was pay growth for job-changers ballooning 10 percent while pay gains for job-stayers were unchanged at 5.1 percent.

“March was surprising not just for the pay gains, but the sectors that recorded them,” Ms. Richardson stated. “The three biggest increases for job-changers were in construction, financial services, and manufacturing. Inflation has been cooling, but our data shows pay is heating up in both goods and services.”

Layoffs climbed for the third consecutive month, with U.S.-based employers announcing plans to cut 90,309 jobs in March, the most since January 2023, according to Challenger, Gray, and Christmas Inc. This was up slightly from 84,638 in February.

In the first quarter of 2024, companies slashed 257,254 positions, up 120 percent from the previous quarter.

The primary reasons for the job cuts were cost-cutting and restructuring, says Andy Challenger, senior vice president of Challenger.

“Many companies appear to be reverting to a ‘do more with less’ approach. While technology continues to lead all industries so far this year, several industries, including energy and industrial manufacturing, are cutting more jobs this year than last,” he said in a statement.

The number of Americans filing for first-time unemployment benefits unexpectedly shot up to 221,000 for the week ending March 30, according to the Department of Labor. Continuing jobless claims eased to below 1.8 million, while the four-week average, which removes the week-to-week volatility, edged up to 214,250.