latest jobs report points to a roaring economy buttressed by immigration

The latest jobs report from the Bureau of Labor Statistics (BLS) was released the morning of April 5th, causing heads to turn. The US added 303,000 jobs in March, its highest monthly addition in over a year (the US added 482,000 jobs in January 2023 while adding the same 303,0000 jobs back in May 2023). This total marks the 39th consecutive month of growth and brings the average number of monthly job additions in 2024 to 276,000—above the 2023 average of 251,000 and well above the premandic average of 183,000 (from 2010 to 2019).

The unemployment rate ticked down slightly (to 3.8%) and marked the 26th consecutive month with a sub-4% unemployment rate. As noted by the BLS, the unemployment rate has been in the 3.7% - 3.9% range since August of last year. Perhaps the least “hot” metric from this latest jobs report were wages, which rose by 0.3% month-over-month and were 4.1% above this time last year (its lowest annual increase since June 2021).

Thomas Simons, a US economist at Jeffries, mentioned in a note to clients that the data left them “speechless”—a prevalent reaction with this latest release as job numbers continue to beat estimates month after month. What may lend a hand in explaining these additions, apart from a roaring economy, is immigration.

In this most recent fiscal year, more than 2 million job authorizations were handed out by immigration services, up from 1.2 million one year earlier. Additionally, the number of employed foreign-born workers rose to a record high of 31.1 million, with a participation rate that outranked that of native-born workers (66% versus 62%). Brett House, Professor of Professional Practice at the Columbia Business School, noted that net immigration is benefiting the US, adding to the pool of workers and bringing technological innovation and refinements that have led to productivity gains.

Regardless of immigration’s impact on these latest job numbers, it’s evident that this report is going to keep the Fed on the sidelines for longer than anticipated. With inflation remaining stubborn and the economy continuing to run hot, the timeline for three rate cuts in 2024 hangs in the balance. Notably, the situation north of the border is charting a different path, with inflation easing and recent lackluster job data pointing to a situation where the restrictive monetary policy undertaken by the Bank of Canada has clearly achieved its goal. The same can’t be said for the Fed just yet.