March jobs report: Payrolls rise by 916,000, unemployment rate drops to 6.0%

The U.S. economy brought back more jobs than expected in March, presaging even faster employment growth in the coming months as more Americans become vaccinated and jobs across industries return. 

The Department of Labor released its March employment report Friday at 8:30 a.m. ET. Here were the main metrics in the report, compared to consensus estimates compiled by Bloomberg: 

• Change in non-farm payrolls: +916,000 vs. +660,000 expected and a revised +468,000 in February 

• Unemployment rate: 6.0% vs. 6.0% expected and 6.2% in February 

• Average hourly earnings, month-over-month: -0.1% vs. +0.1% expected and a revised +0.3% in February 

• Average hourly earnings, year-over-year: 4.2% vs. +4.5% expected and a revised +5.2% in February 

At 916,000, payrolls last month grew by the most since August. Payrolls for both January and February were also revised higher: January's payroll change was upwardly revised to 233,000 from the 166,000 previously reported, and February's job growth totaled 468,000, up from the 379,000 previously reported. 

"It wasn't just the March jobs number that impressed, as January and February saw big revisions higher as well," Ryan Detrick, chief market strategist for LPL Financial, said in an email Friday morning. "This is about as clear as it gets, the reopening is happening faster than nearly anyone expected."

Growth in service sector employment again comprised the biggest contributor to the monthly payrolls increase. Some of the most badly beaten down areas of the service economy made strides in recovering lost jobs in March, reflecting easing social distancing restrictions and increased capacity limits at bars, restaurants and other establishments. Leisure and hospitality payrolls rose by 280,000 in March after an upwardly revised gain of 384,000 in February. However, these industries remain more than 3 million payrolls short of their pre-pandemic levels, representing the hardest-hit industry category tracked by the Bureau of Labor Statistics.

Still, some other areas also contributed notably to the March payroll gain. Within the private service sector, education and health services positions rose by 101,000 to nearly double their February gain, and transportation and warehousing jobs rose by almost 50,000. Retail trade jobs rose by 22,500 for a third straight monthly gain, and professional and business service jobs also posted a third consecutive monthly increase, with payrolls climbing by 66,000.

The private goods-producing sector also added back jobs on net in March after shedding payrolls in February as inclement weather impacted hiring. Construction jobs rose by 110,000 after declining by 56,000 a month earlier. The gain of 53,000 manufacturing payrolls in March nearly tripled these industries' February job gains. 

And in the public sector, government jobs jumped by 136,000 in March, "reflecting the continued resumption of in-person learning and other school-related activities in many parts of the country," the BLS said in its report Friday. 

Overall, the U.S. economy remained about 8.4 million jobs short of its February 2020 levels as of March. 

Average hourly earnings growth unexpectedly turned negative in March over last month and decelerated over last year, partly reflecting the reentry of lower-wage services workers back into the labor force. The unemployment rate fell to a pandemic-era low of 6.0%, ticking down by 0.2 percentage points from February's levels. 

That jobless rate, however, still remained well above the 50-year low of 3.5% the U.S. economy saw in February last year, underscoring the distance still left for the economy to make up. In their latest projections, members of the Federal Open Market Committee suggested the U.S. labor market would return to a 3.5% jobless rate by the end of 2023.

Heading into Friday's report, the estimates for March payroll growth spanned a wide range. Prognosticators have had to predict the extent of the rebound after February's harsh weather, and quantify the pick-up in hiring due to easing social distancing restrictions, increasing vaccinations and renewed aid from Congress's latest stimulus package. 

Still, the vast majority of economists expected that rehiring accelerated last month. High frequency data including new weekly jobless claims have reflected a clear downward trend in the number of those newly unemployed. And earlier this week, ADP's March private payrolls report showed the most jobs added back since September, and the Institute for Supply Management's manufacturing index pointed to rising employment trends in the goods-producing sector.