U.S. nonfarm payrolls rose by 178,000 in March, far exceeding expectations.
The Bureau of Labor Statistics reported Thursday that nonfarm payrolls increased by 178,000 from the previous month. Markets had forecast a gain of 65,000, making the actual figure a surprise overshoot of roughly 110,000. The result marks a sharp reversal from February, when payrolls fell by 133,000 and badly missed expectations.
The healthcare sector drove much of the job creation, adding 76,000 positions. The resolution of a strike at Kaiser Permanente, a major healthcare provider, accounted for 35,000 of those jobs. Seasonal factors tied to warmer weather are also believed to have contributed to the gains.
Still, the health of the labor market showed signs of strain. While healthcare, construction (up 26,000) and transportation and warehousing (up 21,000) led the surprise gain, the federal government shed 18,000 jobs and the financial sector lost 15,000. Job growth was concentrated in specific industries.
The unemployment rate fell to 4.3% from 4.4% in February, also coming in below the 4.4% consensus forecast. However, CNBC noted the decline was driven by a shrinking labor force. The labor force contracted by 396,000, reducing the pool of economically active workers. The labor force participation rate dropped to 61.9%, the lowest since November 2021. Average hourly earnings rose 0.2% month-on-month and 3.5% year-on-year, both missing expectations.
The strong employment data is expected to ease concerns among investors worried about an economic slowdown amid rising oil prices driven by the Iran conflict. With New York markets closed for the day, the reaction to the report is expected to be reflected when trading resumes on the 6th.