The Easter holiday did not stop the Nonfarm Payroll (NFP) release, despite the fact that most banks were closed and trading was slow. The report did not disappoint, showing a strong recovery of the U.S. labor market, on track to reach the pre-crisis trend much faster than anticipated.
As it turned out, the United States economy added 916k jobs in March, a staggering number that shows the quick economic recovery undergoing in America. The market participants expected only 652k new jobs, so the actual was much better than expected.
Earlier data was revised higher – further fueling the bullish sentiment in America. January nonfarm payroll employment was revised up by 67k new jobs, and a similar revision was announced for February, 89k new jobs. In total, the American economy created close to 1.7 million new jobs in the first quarter of the year, fueling hopes of fast economic recovery and strong economic growth ahead.
Details of the March 2021 NFP Report
Besides the bigger than expected number and the positive revisions to previous data, the unemployment rate ticked lower as well. It fell to 6% from 6.2%, continuing its descending trend. However, it remains 2.5% above the pre-pandemic level in February 2020.
The number of long-term unemployment, one of the most critical data inside the report, changed little in March. So did the participation rate, coming out at 61.5%.
All sectors contributed to the strong report. Employment in professional and business services, in manufacturing, transportation, warehousing, social assistant, wholesale trade, or retail trade, ticked higher. It shows an economy responding to the monetary and fiscal stimulus and also an economy that benefits from the increased vaccination pace. The United States is one of the countries in the world that got its act together quite fast and managed to inoculate a big percentage of its adult population.
It is truly difficult to find something negative in the March 2021 NFP report. If anything, the risk moving forward is that the economy will overheat, and so the authorities will have a hard time cooling it down and bringing to the sustainable, longer-term growth trend.
The new White House administration does not plan to stop the fiscal spending. Besides the new $1.9 trillion disbursed in the first quarter of the year, Biden’s administration plans to spend an additional $3 trillion in long-term infrastructure projects.
As such, more jobs are expected in the near future, so the trend will likely continue. Financial markets were not impressed by the report, as most banks were closed due to the Good Friday holiday. If we are to see a reaction, it might come in the week ahead.