Job growth surged far more than expected in March

• The US unemployment rate dropped to 3.8% in March from 3.9% in February.
• There were 303,000 US jobs added, the news release from the Bureau of Labor Statistics said.

Amid job demand for certain well-paying roles and job openings not changing too much from January to February, the US economy added 303,000 jobs in March.

That job growth, stated in Friday's news release from the Bureau of Labor Statistics, was well above the forecast of 212,000 added jobs. Per the news release, January's job growth was revised from 229,000 to 256,000. February's job growth was revised from 275,000 to 270,000.

Julia Pollak, chief economist at ZipRecruiter, told Business Insider the latest jobs report is "the Fed's holy grail: strong job market with non-inflationary growth."

The leisure and hospitality industry saw employment increase by 49,000 to 16.9 million. Friday's news release said that the industry "has returned to its pre-pandemic February 2020 level."

"Over the prior 12 months, job growth in the industry had averaged 37,000 per month," the release said.

Nick Bunker, the economic research director for North America at the Indeed Hiring Lab, told Business Insider the industry "was a big engine of growth for so many years because it was still trying to recover."

"It's unclear if that will be the case moving forward, but there is still strong demand for lots of services related to this industry," Bunker said.

That can be seen with spending, as Bunker said "people are still eager to spend money on services."

Pollak said that leisure and hospitality "was so hugely, heavily disrupted by the pandemic" that despite the return to the pre-pandemic employment peak, "we are nowhere near the pre-pandemic trend."

"That's why I think we can expect to see faster than normal growth for many more months as this industry basically continues to recover and return to trend," Pollak said.

Construction also saw strong employment growth, with a one-month increase of 39,000. Healthcare saw employment growth of around 72,000.

The US unemployment rate decreased from 3.9% to 3.8%. The unemployment rate was forecasted to hold steady at a rate of 3.9%.

After three consecutive months at 62.5%, the labor force participation rate increased from 62.5% to 62.7%. The employment-population ratio increased from 60.1% in February to 60.3% in March.

Average hourly earnings rose 0.3% in March from $34.57 an hour in February. Average hourly earnings rose 4.1% year over year in March, from $33.31 an hour to $34.69 an hour. That rise is less than the previous 4.3% rise.

"People are in the labor market looking for jobs, finding jobs, and wages are up — over the year, it's 4.1%. So that exceeds inflation. That means real money in the pockets of working families. It's exactly what we'd want to see," Acting Secretary of Labor Julie Su told BI.

The Federal Reserve has been closely watching wage growth, and a continued decline could lead the central bank to cut rates later this year as is widely expected.

"Wage growth is ticking down," Bunker said. "We do see some measures that have tightness that are related to the labor market, like the quits rate has ticked down. There's a way for the labor market to continue to grow and be strong and not add fuel to the inflationary fire. And I think we're seeing many signs of that in this report."

Additionally, data released earlier this week shows the number of people who quit rose by 38,000 in February from January's level. There were around 3.5 million quits in February. Openings for roles in February were elevated from the levels seen before the pandemic, but there were only 8,000 more openings in February than January.

"On the last business day of February, the number of job openings changed little at 8.8 million; this measure is down from a series high of 12.2 million in March 2022," Tuesday's news release from the Bureau of Labor Statistics about the Job Openings and Labor Turnover Survey estimates said.

Tuesday's report also showed there were little changes from month to month, such as with job openings and total separations.

"It would be nice to live in a world where we have low unemployment and there's steady, consistent gains in wage growth and more people coming into the labor market," Bunker said. "So hopefully, fingers crossed, dramatic days are behind us and we can see some strong gains for workers, for job seekers. But, not in the way that feels discombobulated."