Like most analysts, I was surprised by the strength of the March report. Sectors that I expected to see putting off hiring due to the threat or reality of cuts, like health care and state and local governments, continued to hire at an impressive rate. We saw strong growth in both restaurants and retail, although this looked largely like a bounce back from weak February numbers. Construction is still adding jobs at a healthy pace, although all in the narrow non-residential specialty trades sector. Manufacturing was positive but barely, at 1,000 jobs.

The one striking number here was the increase of 15,800 jobs in the courier sector (delivery people). This sector has been growing rapidly since October, adding an average of 22,500 jobs a month. This followed a year in which employment was virtually stagnant. This could reflect increased demand for a range of merchandise in advance of tariffs. Anyone who went to an online retailer today probably knows why this was a wise move.

The 0.1 percentage point rise in the unemployment rate to 4.2 percent is in the wrong direction, but not enough to be especially concerned. The employment-to-population ratio (EPOP) for prime age workers (ages 25 to 54) edged down to 80.4 percent; that’s 0.5 percentage points below the post-pandemic peak of 80.9 percent reached for three months last summer. At 86.0 percent, the EPOP for prime age men is 0.6 PP below its peak, while the 74.9 percent rate for women is 0.8 pp below the all-time high hit last May.

One negative sign in the household survey was a further drop in the share of unemployment due to voluntary quits. This fell from 12.9 percent in February to 12.3 percent in March. It had been 13.8 percent in December. With an unemployment rate near 4.0 percent, we would expect the quit share to be around 14.0 percent. This could mean workers are not optimistic about their job market prospects, or could just mean that they are satisfied with their current job. The quit share had also been unusually low through much of 2024.

One item consistent with the pessimistic view of the labor market argument is that it seems wage growth is slowing slightly. The average hourly wage grew at a 3.6 percent annual rate over the last three months compared to 3.9 percent over the last year. But the monthly data are erratic and subject to large revisions, so we may see a different story in April.

A change that may be real is a rise to 2.6 percent in the unemployment rate for college grads. It was at 2.3 percent in January. The last time the unemployment rate for college grads had been this high was in September of 2021. In that month the overall unemployment rate was 4.7 percent.

Prior to the pandemic, the most recent time the unemployment rate for college grads was as high as 2.6 percent was in October of 2016. In that month the overall unemployment rate was 4.9 percent. For some reason it seems the relative labor market situation for college grads is deteriorating. However, we should keep in mind that it is still much lower than for people with less education.

Anyhow, no shoes dropped with this report. But we should keep remembering that it is based on data from mid-March, when big tariffs were still just figments of Donald Trump’s imagination. Things may look different in April, now that Trump has actually put them in place.