A blessed Good Friday to all of our readers! A good Friday it turned out to be for Wall Street, too. Today's jobs report from the Bureau of Labor Statistics blew past expectations, where analysts expected a modest bump up after a negative result in February. Instead, the US economy added 178,000 jobs in March, the best month in well over a year:
Total nonfarm payroll employment increased by 178,000 in March, and the unemployment rate changed little at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in construction, and in transportation and warehousing. Federal government employment continued to decline. ...
Health care added 76,000 jobs in March. Employment in ambulatory health care services rose by 54,000, reflecting an increase of 35,000 in offices of physicians as workers returned from a strike. Employment also increased in hospitals (+15,000). Over the prior 12 months, health care had added anaverage of 29,000 jobs per month.
Employment in construction grew by 26,000 in March but had shown little net change over the prior 12months.In March, transportation and warehousing added 21,000 jobs, reflecting a gain in couriers and messengers (+20,000).
Employment in transportation and warehousing is down by 139,000 since reaching a peak in February 2025.
Employment in social assistance continued its upward trend in March (+14,000), primarily in individual and family services (+11,000).
Wages continue to climb past the rate of inflation as well. The year-on-year increase is at 3.5%, still above even the slightly worrisome inflation signals in February, a good signal that the job market may have been more robust than it seemed during the past few months. The sharp rise in gas prices last month due to the war with Iran may push those inflation indicators higher, but 3.5% annual wage growth looks pretty real at the moment.
The jobs and wages numbers come from the Establishment survey, which shows more reliable outcomes than the Household survey this month (as usual). The unemployment rate decrease may be due in part to nearly 400K people exiting the civilian labor force, which looks like the kind of polling errors we see on a regular basis.
Interestingly, the BLS did not highlight manufacturing, which had its best month in a while, adding 15,000 jobs after losing 3,000 over the previous two months. Almost all of the new jobs went into producing durable goods, the kind of big-ticket items that consumers add when times look good. Financial Times had just assessed the situation in that sector as positive, and credited tariffs in part for boosting investment (via Instapundit):
The manufacturing sector began to respond as well. Demand for capital equipment grew faster after “liberation day” than in 2024, and faster still over the past three months. Industrial output, which had declined over the past decade and fell 0.3 per cent in 2024, has posted a 1.6 per cent gain. Surveys of purchasing managers by the Institute for Supply Management and S&P Global have found increasing optimism among manufacturers. Anna Wong, chief US economist for Bloomberg, confirmed the overwhelmingly positive data last week, noting that it is “corroborated by a very strong signal from the latest earning transcripts” and also that “tariffs probably played a role”.
To deny that reality, opponents of tariffs have seized on the decline in manufacturing employment as the metric that matters and proof that the project is failing. But they are doubly wrong: First, the trend has in fact improved. As compared to the sector’s 167,000 jobs lost in the 11 months prior to “liberation day”, losses in the comparable period since have been only 93,000.
Second, employment is a lagging indicator of re-industrialisation, a process that will take years.
The BLS highlighted the big number from health services (91,000), but about a third of those were workers returning to jobs in California after a strike. The strike delivered a blow to the numbers in February, but the strike ended in the last week of that month. Still, even adjusting for that factor, health services were the biggest winner by far, with leisure and hospitality second (44K) as the weather improved and spring arrived.
For Good Friday, we are (mostly) off, as we enjoy a company holiday, but I wanted to make sure we got a look at these numbers before they get too stale. CNBC's Rick Santelli has a pretty good read on the numbers as they emerged earlier in the morning. He also noticed the sharp change in the U-3 unemployment rate, although he didn't have time to diagnose it by looking at the sketchy Household survey data.
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