The US recorded strong jobs growth in March as higher wages lured more workers back to the labour force, giving the Federal Reserve another data point supporting more aggressive monetary policy to tame inflation.
Employers in the world’s largest economy added 431,000 jobs last month, according to the Bureau of Labor Statistics, a cooler pace than the upwardly revised 750,000 positions created in February and less than Bloomberg’s consensus forecast of 490,000 jobs, but still a substantive increase in a tight labour market.
For the first quarter of 2022, job growth averaged 562,000 per month, in line with 2021. The unemployment rate plummeted to 3.6 per cent, a 0.2 percentage point drop from February and the lowest level since before the pandemic.
In addition to March’s gain, January and February payrolls were revised higher by a combined 95,000, further cementing the view the US economy is headed towards a full recovery from the pandemic, said Bill Adams, chief economist at Comerica Bank.
The drop in the unemployment rate “was larger than expected and broad-based across groups that have historically lagged in economic recoveries”, Adams continued, but he added that it “increases urgency” on the central bank to tighten policy.
“This jobs report solidifies the case for a 50 basis point rate rise by the Fed at their next meeting,” he said, double its typical quarter of a percentage point pace.
The data also showed a pick-up in monthly wage growth after a surprising slowdown in February.
Average hourly earnings registered a 0.4 per cent monthly gain, translating to a 5.6 per cent increase from the same period last year, as businesses continued to compete for talent and rush to fill a near-record number of job vacancies. For every unemployed person, there are roughly 1.7 openings.
At these high levels, the risk to wage growth is now leaning towards the downside, said Michael Pearce, senior US economist at Capital Economics.
“Those strong gains…
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