Economic Report: Now hiring! U.S. economy likely added another half-million jobs in March
The Federal Reserve is raising U.S. interest rates again soon no matter whether the March jobs report is good or bad, but Wall Street expects another big increase in hiring.
Here’s what to watch in the employment report on Friday morning.
Lots of hiring
The U.S. likely created 490,000 new jobs in March, according to a poll of economists by The Wall Street Journal. That’s not far below the 582,000 average in the prior three months.
Businesses have stepped up efforts to hire to keep up with seemingly insatiable demand for their goods and services. They are paying higher wages and benefits and taking other measures to retain employees amid a rash of job-hopping.
The demise of the omicron wave of the pandemic has also resulted in government restrictions being lifted and Americans being more comfortable going out again. Hiring is rising at restaurants, hotels, recreational sites and other service providers.
At the current rate of hiring, employment in the U.S. is on track to exceed pre-pandemic levels by early summer.
Read: U.S. private sector adds 455,000 new jobs in March, ADP says
The U.S. unemployment rate has fallen sharply in the past year and a half to 3.8%.
In March, Wall Street DJIA SPX expects unemployment to slip again to 3.7%.
The jobless rate is closing in on the pre-crisis low. Shortly before the pandemic erupted in March 2020, unemployment had sunk to a 50-year bottom of 3.5%.
By contrast, unemployment soared to as high as 14.7% officially early in the pandemic— and it was probably around 20% unofficially, economists say.
Millions of workers left the labor force after the onset of the crisis and many have still not returned. Some retired early and plan to stay retired. Others were caring for older relatives or younger kids.
Economists contend more people will return to the jobs market if the number of coronavirus cases stay low and life returns closer to normal.
The highest inflation in 40 years might also push more people to look for jobs to pay the bills, especially as their savings run out.
“As financial pressures from inflation mount, more Americans who exited the labor force during the pandemic are likely to re-enter, fueling faster labor force growth,” said Bill Adams, chief economist of Comerica Bank.
The share of the working-age population in the labor force steadily crept higher last year and touched 62.3% in February. Yet that’s still well below the precrisis peak of 63.4%.
Read: Is this it? More than half of workers still are not returning to office
What does it mean? About 1.8 million workers are missing from the labor force compared to the last month before the pandemic. That helps explain why the U.S. has such as big labor shortage.
The missing millions has been a boom for Americans who are still working.
Average pay has shot up 5.1% over the past year to $31.58 an hour — the biggest increase since 1982 excluding the first few months of the pandemic.
Economists forecast a robust 0.4% gain in wages in March.
Wages started to surge last year as businesses competed for workers and tens of millions of people quit one job for another in what’s become known as “The Great Resignation.” Most of the job quitters ended up in positions that paid more money.
Read: U.S. corporate profits jump 25% in 2021 to record high as economy rebounds from pandemic
Wages aren’t keeping up with inflation, however. The cost of living has jumped almost 8% in the past year, leaving most workers worse off.
Economists predict inflation will slow later to this year to under a 4% yearly rate. But they expect wage growth to taper off as well.