March employment: New data, same story
Summary
Hiring plowed full steam ahead in March, with nonfarm payrolls once again blowing past expectations with an increase of 303K. Along with minimal revisions to prior months' data, the three-month average pace of payroll gains (276K) is running at its strongest pace in a year. The unemployment rate ticked down to 3.8% amid a rebound in the household measure of employment. Labor supply growth also looked strong in March, with the participation rate moving up to a four-month high of 62.7%. Robust labor supply growth over the past year has helped support the overall pace of hiring while reducing the inflationary pressures stemming from the jobs market. While average hourly earnings picked up in March with a 0.3% monthly increase, year-over-year growth slowed to nearly a three-year low of 4.1%.
In our most recent economic forecast update released on March 14, we laid out a base case of 100 bps of easing by the FOMC this year. That said, we made the case at the time that the risks were skewed towards less easing rather than more. Today's report further confirms that distribution of risks. We will update our Fed outlook after next Wednesday's CPI report, but based on what we know now, the strength of the labor market suggests the FOMC can continue to await further improvement on the inflation front before easing policy.
Author
Wells Fargo Research Team
Wells Fargo
