The US labor market recorded a surprise recovery in March with the addition of 178,000 non-farm payrolls (NFP). This figure far exceeded analysts' forecasts of 59,000 and marked a rebound after a sharp decline in February that saw the loss of 133,000 jobs (after revision).
The healthcare sector remained the main driver of the economy, contributing 76,000 new jobs. The recovery was helped by the return of 35,000 Kaiser Permanente employees who ended their strike. The construction and transportation sectors also recorded positive growth, providing some relief to the nervous market.
However, the report also revealed the dark side of the economy as the federal government sector and financial activities continued to lose thousands of employees. Despite the overall positive figure, the average job growth for the last three months, which was only at 68,000, indirectly reinforces the narrative of a still sluggish labor market overall.
The official unemployment rate fell slightly to 4.3%, but some analysts called the decline “inaccurate.” That’s because the decline was driven by nearly 400,000 people dropping out of the labor force, not by widespread hiring. In fact, the household survey showed 64,000 fewer people were employed than last month.
The alternative unemployment rate (U-6), which includes those who are part-time workers due to economic factors and those who have stopped looking for work, rose to 8%. This suggests that despite the rebound in the numbers, the structure of the U.S. labor market is actually becoming more fragile amid cost-of-living pressures and geopolitical uncertainty.
