US employment data rose more than expected in March 2024 and wages rose at a steady pace, suggesting the US economy ended the first quarter of 2024 on solid footing and potentially delaying the Federal Reserve's expected interest rate cut this year.
The closely watched jobs report from the US Department of Labor released on April 5 showed the unemployment rate fell to 3.8% in March 2024, from 3.9% in February 2024.
The US unemployment rate has been below 4% for 26 consecutive months, the longest stretch since the late 1960s. The US economy is showing signs of outperforming other economies globally, although the Fed has raised interest rates by 525 basis points since March 2022 to curb inflation.
Some analysts say increased immigration over the past year is helping to strengthen the US labor market.
The US Department of Labor's Bureau of Labor Statistics said nonfarm payrolls increased by 303,000 in March 2024, higher than the 200,000 new jobs forecast by analysts surveyed by British news agency Reuters.
Average job growth in Q1 2024 is 276,000 jobs per month, compared with an average of 212,000 jobs per month in Q4 2023.
Interest-rate-sensitive industries, such as construction, are also ramping up hiring as financial conditions ease.
About 59.4% of industries added jobs in March 2024, easing concerns that job gains were concentrated in too few sectors.
Construction added 39,000 jobs, double the monthly average of 19,000 over the past 12 months. Leisure and hospitality employment increased by 49,000, returning to pre-pandemic levels. Employment in social assistance, retail and wholesale trade also increased.
Average hourly earnings rose 0.3% in March 2024 after rising 0.2% the previous month. Wages rose 4.1% year-over-year, the smallest gain since June 2021, after rising 4.3% in February 2024. Wage gains in the 3%-3.5% range are considered consistent with the Fed's 2% inflation target.
Inflation data, due next week, will be crucial in determining when the Fed cuts interest rates for the first time this year. The Fed has kept rates in a range of 5.25% to 5.50% since July 2023.
Fed policymakers are debating the right time to start cutting interest rates, as they seek to return inflation to their long-term target of 2% without harming the growing US economy.
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