LIVE MARKETS-Oh, was payrolls this morning? A jobs report deep dive

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OH, WAS PAYROLLS THIS MORNING? A JOBS REPORT DEEP DIVE

Markets were perhaps the least interested they've ever been in a monthly employment report on Friday, with world stock markets plunging in the wake of President Trump's massive tariff announcement on Wednesday and China's hardball retaliation.

The U.S. economy added 228,000 jobs in March USNFAR=ECI, 94.9% improvement over February's downwardly revised 117,000 gain and 93,000 more than analysts expected.

This marks the fifth upside surprise in the past 12 months, and the fourth reading north of 200,000 over the past year.

Digging beneath the headline, service-providing jobs accounted for 94.3% of the 209,000 private sector job adds. The retail sector rebounded, adding 23,700 jobs, while government payrolls - which include state and local agencies unaffected by the mass DOGE-related firings - increased by 19,000, a steep acceleration from February's gain of 1,000, revised sharply lower.

"While the data is now especially stale in light of this week’s sweeping tariff actions, the strong beat on U.S. jobs should help investor sentiment heading into the weekend," writes Natalia Lojevsky, managing director at CIFC Asset Management.

"The number confirms that the US economy, lead by the seemingly indefatigable US consumer, has kept trucking along despite pervasive uncertainty which has roiled risk assets," Lojevsky adds.

The report also gave markets their first glimpse at March inflation, showing average hourly wages rose by 0.3%, slightly warmer than the prior month's 0.2% print and inline with analyst expectations.

Year-over-year, however, wage growth cooled down, rising to 3.8% from 4.0%, and landing a hair below the 3.9% consensus.

It's a move in the right direction, but 3.8% remains well north of the Powell & Co's 2% annual inflation goal.

"The Fed’s job got a lot more complex as inflation is not yet under control," writes Jeffrey Roach, chief economist at LPL Financial.

The jobless rate USUNR=ECI unexpectedly rose to 4.2% - analysts expected it to stand pat at 4.1% - while at the same time the labor market participation rate improved by just a smidgeon, rising 10 basis points to 62.5%, bouncing off a two-year low.

When more Americans leave the sidelines and dive into the labor pool, that tends to put upward pressure on the unemployment rate; it's not until someone starts looking for a job that they're counted among the jobless.

"The headline unemployment rate moved higher ... but for 'good reasons': the labor force participation rate rose," says Chris Zaccarelli, chief investment officer at Northlight Asset Management.

Average unemployment duration jumped last month to 23.6 weeks, from an even 21.0, the second-longest this metric has been since April 2022.

This corresponds well with souring labor market confidence and the general downward hiring trend as expressed by the Labor Department's JOLTS data:

Finally, breaking down joblessness by race and ethnicity, unemployment among White Americans eased to 3.7% from 3.8%, while Black joblessness worsened, rising to 6.2% from 6.0%.

That pushed the White/Black unemployment gap 0.3 percentage points wider to 2.5 ppts.

(Stephen Culp)

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