A closely watched report released by the Labor Department on Friday showed U.S. employment increased by less than expected in the month of March.
The report showed non-farm payroll employment jumped by 431,000 jobs in March after surging by an upwardly revised 750,000 jobs in February.
Economists had expected employment to spike by 490,000 jobs compared to the addition of 678,000 jobs originally reported for the previous month.
While the job growth in March fell short of estimates, revisions to data for the two previous months showed employment increased by 95,000 more jobs than previously reported.
The Labor Department said notable job gains continued in leisure and hospitality, professional and business services, retail trade, and manufacturing.
The strong job growth still contributed to a drop in the unemployment rate, which dipped to 3.6 percent in March from 3.8 percent in February. The unemployment rate was expected to edge down to 3.7 percent.
With the bigger than expected decrease, the unemployment rate fell to its lowest level since hitting 3.5 percent in February of 2020.
The decline in the unemployment rate came as the household measure of employment soared by 736,000 jobs, while the labor force increased by 418,000 persons.
“For all the talk about a permanent drop in the labor force, it is now just 174,000 below its pre-pandemic level, with household employment only 408,000 short of its February 2020 level,” said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, “Still, there remains a big discrepancy between the household and payroll surveys, with the level of non-farm payrolls still 1.6 million below the pre-pandemic peak, with nearly all of that shortfall concentrated in leisure and hospitality specifically.”
The report also showed average hourly earnings climbed $0.13 or 0.4 percent to $31.73 in March. The annual rate of wage growth accelerated to 5.6 percent in March from 5.2 percent in February.
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