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Key takeaways

  • The Bureau of Labor Statistics (BLS) reported that the U.S. economy added 303,000 jobs in March 2024, marking an acceleration in the pace of hiring.
  • Other key labor market indicators – including the 3.8% unemployment rate and 0.3% month over month (MoM) rise in average hourly earnings – were also strong.
  • The Federal Reserve (Fed) previously said it needs to see more evidence that employment is slowing to bring inflation down to its 2% target.


John Veit

Outpacing expectations

The March jobs report confirms the labor market remains resilient, despite high interest rates and slowing economic indicators. The U.S. labor market added 303,000 jobs in March, representing an acceleration in the pace of hiring. January’s nonfarm payroll gains were upwardly revised to 256,000, while February’s nonfarm payroll gains were revised down to 270,000.1

March’s nonfarm payroll gains bring the three-month average employment gain to a 12-month high of 276,000 jobs. That pace is likely not sufficient to bring inflation down to the Fed’s 2% target. However, indicators suggest that the pace of job growth will slow and help lower inflation in the upcoming quarters.

The bar chart presents the monthly change in U.S. nonfarm payrolls employment.

Industry breakdown

Payroll gains in March were narrowly-based. Employment gains in health and private education, government, and leisure and hospitality contributed to 208,000 of the total job gains. Leisure and hospitality employment rebounded to its pre-pandemic level, with 49,000 gains in March, partly boosted by the milder winter. The BLS payroll index rose to 59.4 in March, showing that increasingly more industries reported jobs gains, which further drove headline payroll growth.

Employment in goods-producing industries also ticked higher, adding 42,000 jobs in March. This was driven by a higher-than-expected 39,000 gain in construction jobs, partly distorted by recent milder weather conditions, though we expect these weather-related distortions to subside later this year. Jobs in manufacturing were unchanged, while jobs in mining and logging increased by 3,000.2

Employment in service-producing industries were muted, except for the sharp 18,000 rise in retail jobs. Professional and business services posted 7,000 job gains, less than expected and February’s gain of 17,000.3

Unemployment rates and growth

The labor market remains strong, despite showing some signs of moderating. The overall unemployment rate fell back to 3.8% in March from 3.9% the prior month. This fall was driven by a 498,000 gain in the household survey measure of employment last month. The labor force participation rate rose to a five-month high of 62.7 in March. The rises in employment and participation were mostly driven by workers aged 16 to 24,4 offsetting the slight declines in prime-aged workers and participation.

The preliminary reading of the March average hourly earnings report, an important measure for inflation, increased by 0.3% MoM. Year over year (YoY), average hourly earnings have increased by 4.1%, the slowest annual pace since mid-2021. Although wage growth remains too strong for the Fed, forward-looking indicators suggest that wage growth will moderate later this year.5

The number of job openings in February rose slightly to 8.76 million from 8.75 million the prior month, according to the BLS Job Openings and Labor Turnover Summary report released this week. This keeps the jobs opening rate unchanged at 5.3%. Underlying details of the report show signs that labor market conditions are gradually easing – the private job quits rate remains at 2.4%,6 below its 2019 average, indicating wage pressures are trending in the right direction.

Another sign that economic growth is moderating is the fall in the Institute of Supply Management’s (ISM) services index to 51.4 in March from 52.6 in February. This decline indicates core inflation could lower in upcoming months.7

Rate implications

The state of the labor market is a key indicator in the Fed’s interest rate hiking decisions, as the Fed continues its battle to bring inflation down to its 2% target. At March’s Federal Open Market Committee (FOMC) meeting, the Fed held its benchmark overnight interest rate steady at 5.25% to 5.5% for the fifth straight meeting.8 In projections released after the meeting, Fed Chairman Jerome Powell maintained the Fed’s expectation of three rate cuts in 2024, leaving the door open for fewer. We don’t expect March’s jobs report to avert the Fed’s projections, given the welcomed moderation in inflation this past year.

However, the Fed said it needs to see more compelling evidence that inflation is moving closer to its 2% target before considering rate cuts. The Consumer Price Index (CPI) slightly rose to 3.2% YoY in February, a slight uptick from the 3.1% YoY rise in January, but down from over 9% in 2022.9 Despite the slight uptick, the overall downtrend in inflation suggests the economy could avoid a hard economic landing while successfully bringing inflation down to the Fed’s goal.

On April 3, Powell described the labor market as “strong but rebalancing” and said inflation is “moving down toward 2% on a sometimes bumpy path.”10

The March inflation report is set to be released April 10 and will play a role in the Fed’s interest rate decision-making process at its next FOMC meeting. However, it’s important to note the Fed’s preferred measure of inflation, the Personal Consumption Expenditures (PCE) deflator, will be released April 26 and will likely play a larger role in their decision-making.



Bureau of Labor Statistics. “The Employment Situation—March 2024.”








Bureau of Labor Statistics. “The Employment Situation—March 2024.”


Bureau of Labor Statistics, “February Job Openings and Labor Turnover Summary.” (April, 2024)


Institute for Supply Management. “March 2024 Services ISM Report on Business.”


Federal Reserve. “Federal Reserve issues FOMC statement.”


Bureau of Labor Statistics. “Consumer Price Index – February 2024.”


Board of Governors of the Federal Reserve System. “Speech – Opening Remarks.”

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