The economy beat expectations by adding 916,000 new jobs in March while the unemployment rate dropped to 6% as businesses recover from the COVID-19 pandemic, the Bureau of Labor Statistics reported Friday.
Forecasters had anticipated some 647,000 new nonfarm payroll jobs.
Friday's numbers were a “huge upside surprise,” said Mark Hamrick, the senior economic analyst for Bankrate.com.
“In the coming months, we can expect more jobs added, and the headline unemployment rate should sink into the 5% range,” he said.
In its Friday release, the Bureau of Labor Statistics revised up its January and February estimates by 156,000 total jobs.
Demand for labor has increased as stores, restaurants, and other businesses keep emerging from the yearlong slump brought on by pandemic restrictions. More and more people are getting vaccinated for COVID-19, the major factor at play in how quickly the economy can regain its pre-pandemic footing.
The growth also comes as the U.S. economy feels the effects of President Joe Biden’s $1.9 trillion COVID-19 relief package, which provided many consumers eager to venture out of their homes with $1,400 stimulus checks to spend. The American Rescue Plan Act was the third round of stimulus money that went out to consumers, and many who saved the money from the previous stimulus checks may now be looking to go out and spend. Biden is seeking now to pass a $2 trillion infrastructure plan.
Restaurants recovered slightly as shutdowns eased. Some 280,000 more jobs were added in the leisure and hospitality industry, with nearly two-thirds of that increase attributed to increased employment at restaurants and bars. That figure is still down by 3.1 million since March of last year.
Employment in education also saw gains as in-person education begins to ramp back up. About 126,000 jobs were added in state and local public education, and 64,000 private education jobs were added.
This month the Federal Reserve released projections for much stronger growth and lower unemployment rates than anticipated before. Officials projected that unemployment will fall to 4.5% and that real gross domestic product growth will be buoyed to 6.5% this year.
Despite the lofty forecasts, Fed Chairman Jerome Powell recommitted to holding interest rates steady at near-zero, an aggressive stance that some economists worry, when combined with Democrats' spending, could lead to too-high inflation. The Fed predicts that while inflation may bounce above the 2% threshold, it will later decline. The central bank wants to continue its easy-money policies until sustained inflation reaches 2% and U.S. employment rates have peaked.
While March was a positive month for job growth, the U.S. is still down by more than 8 million jobs from its pre-pandemic peak in February 2020.
At the start of the pandemic, unemployment reached a historic high of 14.8% in April. Despite growth over the past few months, the economy still isn’t close to its pre-pandemic low of just 3.5% unemployment in March of last year, although this month’s report shows that progress is being made.
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