March Job Recovery
The market’s recovery over the past year can be attributed in part to expectations that COVID would be largely suppressed and that the economy could then regain its strength. It may have slipped under the radar with the holiday weekend, but Friday’s job report certainly added fuel to the economy’s fire.
The economy added 916,000 jobs in March, well above expectations of 675,000. Moreover, the January and February employment reports were revised upwards, with a resulting gain of another 156,000 jobs between those two months. The March unemployment rate fell from 6.2% to 6.0%.
Not surprisingly, employment gains were most heavily realized in leisure and hospitality, a sector which had been devastated by COVID. Leisure and hospitality posted an increase of 280,000 jobs in March, 156,000 of which came from restaurants and bars. Educational institutions also hired 190,000 employees over the past month.
While the March unemployment report was unambiguously strong, unemployment remains well above pre-pandemic levels, with net job losses in leisure and hospitality alone still totaling 3.1 million. More months like March are needed as the year progresses.
Markets have responded positively to the jobs report, with the S&P 500 posting a 1.5% gain as of midday on Monday. In years past a positive jobs report may have caused market concerns that the Fed would raise rates to forestall the possibility of inflation, but under Jerome Powell’s leadership the Fed has made its intention clear of letting the recovery continue apace.
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This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument or investment strategy. This material has been prepared for informational purposes only, and is not intended to be or interpreted as a recommendation. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice.