The train has left the station
We added 916k new jobs in March, coming in well above expectations for 675k new jobs. Plus, the numbers for the last two months were revised upward by 156k. The leisure and hospitality sector saw the most job gains last month, adding 280k new jobs as improving weather and increasing vaccination rates have allowed cities to start easing restrictions and consumers to become more willing to venture out. Job gains were also strong in the government, construction, and health and education sectors.
Moral of the story: This report indicates a nice little labor market recovery is in the works, and expectations are for this to continue accelerating through the spring into the summer. Though only time will tell as cases are actually rising again for the first time in months. We still have about 8.4m jobs left to recover, but it at least appears like we’re moving in the right direction.
Reaching new highs
The manufacturing sector continued to grow in March as the ISM manufacturing index actually hit a 38-year high of 64.7 (anything over 50 is considered to be in growth mode and anything over 55 is considered “exceptional”). Manufacturers are reporting strength in production, new orders, and employment almost across the board.
Moral of the story: The manufacturing sector has been quite resilient throughout the pandemic, though global supply chain disruptions due to COVID-19 restrictions (plus the recent Suez Canal debacle) are still a bit of a hinderance for manufacturers. The sector should continue to see strength as the economy reopens though it likely won’t reach its full potential until we’ve globally moved past the pandemic, which might honestly be into next year.
More government spending
Biden introduced a $2T infrastructure and economic recovery plan this week, which includes funds to revitalize our transportation infrastructure (the streets of Philadelphia are in such poor shape they’re probably better traversed via camelback than a car at this point), water systems, broadband networks, electrical grids, care for the elderly and disabled, manufacturing, and more. This is just the first part of his recovery plan, which is designed to create jobs, upgrade our infrastructure, and combat climate change. He plans on unveiling a second plan to improve education and healthcare in the upcoming weeks.
Moral of the story: Democrats are trying to pass this package by July 4 and the goals sound great, except it’s going to be funded by increasing the corporate tax rate to 28% (from 21%), which would be meaningfully higher than tax rates across most of the developed nations and you can see why the market/companies/Republicans would not be fans. However, the Democrats were able to pass their $1.9T COVID relief package without a single Republican vote, so we’ll see what the final version of this looks like in a few months.