The US economy added 916,000 jobs in March and the unemployment rate edged down to 6 per cent in a sign that the recovery was accelerating in the month that Joe Biden signed his $1.9tn stimulus into law.
The non-farm payrolls data released on Friday exceeded economists’ expectations and marked a sharp improvement from the upwardly revised 468,000 jobs created in February and 233,000 positions created in January.
The improvement in the labour market has occurred amid optimism over America’s fight against the pandemic, as a winter surge in infections has ebbed and the rate of vaccinations picked up sharply.
In the past few weeks, Covid-19 cases have started to increase again but the pace of inoculation has continued to rise, raising hope of further improvement in coming months.
The March job gains were not only larger than in previous months, but more broadly based. Hiring in the leisure and hospitality sector, which has been especially sensitive to the ups and downs of the pandemic but drove last month’s job gains, slowed from a pace of 384,000 to 280,000.
But goods-producing employment, including manufacturing and construction, bounced back sharply, from job losses of 44,000 in February to a gain of 183,000 positions last month. Government hiring surged to 136,000 after shedding 90,000 jobs in February.
The stronger recovery has led investors to sell off long-term US Treasury debt in recent months, lifting yields on the 10-year note to more than 1.7 per cent. But Federal Reserve officials have not expressed any alarm over rising borrowing costs or even the likely surge in inflation this year, saying it is likely to be transient.
Long-dated US government bonds, which recently notched the worst quarterly performance since 1980, wavered after the report was released.
The benchmark 10-year Treasury yield climbed 0.03 percentage points to 1.7 per cent in morning trading in New York, well off of the 14-month peak of 1.78 per cent reached earlier this week.
Five and seven-year Treasuries also came under pressure, sending yields roughly 0.04 percentage points higher. The five-year note now hovers around 0.94 per cent, while the 7-year trades around 1.40 per cent.
Major stock markets globally, including US indices, are closed for the Easter weekend.
The strength of the jobs report was amplified by the decline of the unemployment rate from 6.2 per cent to 6 per cent, as more Americans found jobs and more looked for jobs, with the US labour force expanding by 347,000 people.
“The [rebound] still leaves employment 8.4m below its pre-pandemic peak from just over a year ago but, with the vaccination programme likely to reach critical mass within the next couple of months and the next round of fiscal stimulus providing a big boost, there is finally real light at the end of the tunnel,” said Paul Ashworth, chief US economist at Capital Economics.
Brian Levitt, global market strategist at Invesco, said the report was “confirmation of what we all were starting to pick up on some months ago, which was that the economy is accelerating and the vaccine rollout is a game changer”.
“You add on top of that the fiscal support [with] a lot of money set to be deployed . . . and as a result you are seeing businesses hire to address current demand and get in front of future demand.”
However, Levitt warned that there still remained millions of Americans out of work.
“We are coming out of a disastrous outcome,” he said. “The jobs market still has more room to go to heal. For the Federal Reserve, they are not viewing this as anywhere close to full employment.”