The labor market is still strong, but for business owners, this isn't the hiring frenzy from a few years ago.
U.S. employers added 303,000 jobs last month, which is higher than the 231,000 average monthly gain for the past 12 months and significantly higher than economists' expectations for March. The unemployment rate, meanwhile, remained historically low at 3.8 percent--the 26th month below 4 percent.
Sounds pretty tight, right? But "while employer demand remains high, worker supply is rising to meet it," says Nick Bunker, economic research director for North America at Indeed Hiring Lab.
Indeed, labor force participation came in at 62.7 percent in March and has been gradually rising since its sharp plunge in the pandemic's early days. And quits are down to the lowest levels since 2020 for the fourth consecutive month, after spiking in late 2021 and early 2022.
Thus, employers are starting to make "much more strategic hiring decisions in some places," says Gregory Daco, chief economist at EY-Parthenon.
Small-business owners are already starting to feel the effects: Just 37 percent had job openings they couldn't fill in March, according to the National Federation of Independent Business--the lowest reading since January 2021. And the percentage listing labor quality as their most pressing problem was the lowest in almost four years.
Plus, wage growth, while likely still too high for the Federal Reserve's liking, eased from a 4.3 percent year-over-year increase in February to 4.1 percent in March, according to this jobs report. "The wage gains you're going to have to dole out to attract workers is going to be less than in the past," Bunker says.
And yet, while "it's easier to hire, but it's not easy to hire," said ADP chief economist Nela Richardson in a conference call Wednesday. "The challenge, especially for the smallest businesses, is that this is a competitive labor market still."