Employment is just 1% below pandemic-era levels, and the gap is closing
The US job market continued its hot streak in March. Total nonfarm payrolls increased by 431,000 in March, bringing the unemployment rate to a new pandemic low of 3.6%, the Bureau of Labor Statistics said Friday.
Total employment in construction continued to increase in March, adding 19,000 jobs, and has returned to its February 2020 level. There were also notable job gains in leisure and hospitality (+112,000), professional and business services (+102,000), retail trade (+49,000), and manufacturing (+38,000).
“March was another strong month for the job market,” said Mike Fratantoni, chief economist of the Mortgage Bankers Association. “Job gains were well above what can be sustained for the longer term, the unemployment rate dropped – despite a small increase in labor force participation, and wage growth increased again. Furthermore, the job gains for both January and February were revised higher. While employment remains 1% below February 2020 levels, the gap is closing, with increases averaging 562,000 per month in the first quarter.”
Read next: What do mortgage professionals think will happen in 2022?
The labor force participation rate was 62.4% in March, and the average hourly earnings rose by 13 cents to $31.73 last month. Over the past year, wage growth on private nonfarm payrolls has climbed by 5.6%.
Fratantoni said that the rapid decline in the jobless rate signals that the pool of potentially available workers continues to drain quickly. “With the large number of job openings reported in the most recent data, there will continue to be significant upward pressure on wages, with wage growth over the last 12 months running at 5.6%,” he added.
“Although mortgage rates have spiked more than half a percentage point over the past two weeks, reducing affordability for many potential first-time homebuyers, the increase in wages will certainly somewhat help offset that hurdle,” Fratantoni said. “And the confidence that many potential homebuyers have in their financial situation also benefits from this historically strong job market. We continue to expect that the Federal Reserve will move rates up expeditiously to counter surging inflation and that this report only adds more urgency to their plans to do so.”
Read more: March another strong month for US job market – MBA
“In housing, prices unexpectedly accelerated in January as, in our view, buyers rushed to lock in lower rates and as inventories remained historically tight,” said Nathaniel Drake, analytics associate at Fannie Mae’s Economic and Strategic Research Group. “Despite the reacceleration in house price growth, we continue to predict that it will slow this year, especially as mortgage rates climbed to 4.67%, according to this week’s Freddie Mac Primary Mortgage Market Survey, further worsening affordability pressures.”
