April 2, 2021 Reading Time: 4 minutes

U.S. nonfarm payrolls added 916,000 jobs in March after a gain of 468,000 in February and 233,000 in January. The two prior months had net upward revisions of 156,000. The March gain brings the three-month gain to 1.617 million and the eleven-month post-plunge recovery to 13.959 million but is still far from offsetting the 22.362 million loss in March and April of 2020, leaving nonfarm payrolls 8.403 million below the February 2020 peak (see first chart).

Private payrolls posted an impressive 780,000 jobs gain in March after a 558,000 gain in February and a 122,000 gain in January. The two prior months had a net upward revision of 125,000. The March gain brings the three-month gain to 1.46 million and the eleven-month recovery to 14.172 million versus a loss of 21.353 million in March and April of 2020, leaving private payrolls 7.181 million below the February 2020 peak (see first chart).

Overall breadth of gains for March were impressive with every major private category showing a rise except for one. Within the 780,000 gain in private payrolls, private services added 597,000 while goods-producing industries gained 183,000. For private service-producing industries, the gains were led by a 280,000 surge in leisure and hospitality (following a gain of 384,000 in February), a 66,000 rise in business and professional services, a 64,000 increase in education services, a 48,000 rise in transportation services, and a 36,000 gain in health care and social assistance. The one category to show a drop was information services, down 2,000 for the month (see second chart).

Within the 183,000 gain in goods-producing industries, construction surged, adding 110,000 jobs, durable-goods manufacturing increased by 30,000, nondurable-goods manufacturing rose by 23,000, and mining and logging industries gained 20,000 jobs (see second chart).

Despite the strong gain, every private industry group still has fewer employees than before the government lockdowns. Leisure and hospitality still leads with a loss of 3.1 million jobs followed by health care, down 863,000, and professional and business services with a drop of 685,000 (see third chart).

On a percentage basis, the losses are more evenly distributed. Leisure and hospitality still leads with a 18.5 percent drop since March, mining and logging comes in second with an 11.6 percent loss followed by information services at 8.3 percent and education services at 8.2 percent. Seven of the 14 private industries shown in the report have declines of 4 percent or more since March 2020 (see fourth chart).

The government sector added 136,000 employees in March, with local government payrolls rising by 83,000, state government payrolls up 46,000, and the federal government adding 7,000 workers.

Average hourly earnings fell 0.1 percent in March, putting the 12-month gain at 4.2 percent. The average hourly earnings data should be interpreted carefully, as the concentration of job losses for lower-paying jobs during the pandemic distorts the aggregate number.

The average workweek increased in March, rising 0.3 hours to 34.9 hours. Combining payrolls with hourly earnings and hours worked, the index of aggregate weekly payrolls jumped 1.4 percent in March. The index is up 2.1 percent from a year ago.

The total number of officially unemployed fell to 9.710 million in March, a drop of 262,000 from February. The unemployment rate fell to 6.0 percent while the underemployed rate, referred to as the U-6 rate, fell to 10.7 percent in March. In February 2020, the unemployment rate was 3.5 percent while the underemployment rate was 7.0 percent (see top of fifth chart).

The participation rate rose in March, coming in at 61.5 percent versus a participation rate of 63.3 percent in February 2020. The employment-to-population ratio, one of AIER’s Roughly Coincident indicators came in at 57.8 for March, above the 57.6 ratio in February 2021 but well below the 61.1 percent in February 2020 (see bottom of fifth chart).

The March jobs report shows a strong, broad-based gain in private payrolls. The strong report is consistent with other signs that the economic recovery from the government lockdowns in 2020 is gaining momentum as the restrictions on consumers and businesses are lifted. However, the damage done by the lockdowns was severe; for nearly all private industries, employment is still below pre-pandemic levels, quite substantially below in some cases, and is likely to take a significant amount of time to fully recover.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals.

Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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