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Commentary on today’s U.S. Bureau of Labor Statistics Employment Situation Report
By Frank Steemers, Senior Economist, The Conference Board
Nonfarm employment increased by 916,000 in March, after an upwardly revised increase of 468,000 in February. The published unemployment rate dropped from 6.2 to 6.0 percent, and the true rate, after adjusting for the misclassification error, decreased from 6.7 percent to 6.4 percent in March. The labor force participation rate slightly increased from 61.4 to 61.5 percent. The number of jobs is still 8.4 million below February 2020 levels.
For the second month in a row, most jobs were gained in leisure and hospitality--280,000 jobs in March after 384,000 jobs in February--and concentrated in food and drinking places. When restrictions on traveling and in-person entertainment are eased, large bounce backs in employment in accommodation and arts, entertainment, and recreation are anticipated---both industries are still respectively 30 percent and 28 percent below February 2020 employment levels. Construction gained 110,000 jobs in March after job losses in February related to inclement weather.
The labor market outlook for the remainder of 2021 appears to be strong, despite the recent uptick in the number of new cases, as more people are getting vaccinated and state restrictions on consumer and business activity are being eased across the country. Job gains should especially benefit Black and Latino workers since they are overrepresented in the hard-hit in-person services industries. In addition, a better labor market outlook should also pull more people back into the labor force, especially women as they accounted for 55 percent of the job losses since the start of the pandemic. In March, 492,000 women joined the labor force, the largest increase since June 2020, while for the third consecutive month men have dropped out of the labor force.
By the end of the year, around 4.5 million more jobs could be added to the economy and the unemployment rate is expected to drop well below 5 percent. As soon as 2022 a tight labor market could reappear.
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