Job growth was notably in leisure and hospitality, professional and business services, retail trade, and manufacturing, according to the report released by the department's Bureau of Labor Statistics (BLS).
"Higher wages, more consistent school schedules and inflation are all bringing workers in from the sidelines," Diane Swonk, chief economist at major accounting firm Grant Thornton, said in a recent blog.
Average hourly earnings for all employees on private nonfarm payrolls rose by 13 cents, or 0.4 percent, to 31.73 U.S. dollars in March, the BLS report showed. Over the past 12 months, average hourly earnings have increased by 5.6 percent.
A 0.4 percent rise in average hourly earnings would mark a reacceleration in wages from February but "lag overall inflation," Swonk noted.
Recent data from the labor market showed that the consumer price index in February rose 0.8 percent from the previous month, surging 7.9 percent from a year earlier, the largest 12-month hike in four decades.
Data from the Commerce Department released Thursday showed that core personal consumption expenditures (PCE), which excludes the volatile food and energy prices, jumped 0.4 percent in February, up 5.4 percent from the same period last year, also marking the biggest jump in nearly four decades.
Aside from higher wages and surging inflation, the easing of Omicron surge has also encouraged more people to return to the labor market. Meanwhile, it supported consumption, thus boosting demand for labor, as employers scramble to hire workers.
The number of job openings was little changed at 11.3 million by end of February, the U.S. Bureau of Labor Statistics reported Tuesday. The number of unemployed persons, however, decreased by 318,000 to 6.0 million, according to the newly released March unemployment report.
As U.S. Federal Reserve Chairman Jerome Powell said last week, the labor market is "extremely tight," even significantly tighter than the very strong job market just before the pandemic.
Workers continue to quit at near record rates, partly for higher wages. In February, the number of quits was at 4.4 million, with a rate of 2.9 percent. Quits increased in retail trade, durable goods manufacturing and state and local government education.
According to a Conference Board survey released Tuesday, 57.2 percent of consumers said jobs were "plentiful," up from 53.5 percent, a new historical high, while 9.8 percent of consumers said jobs were "hard to get," down from 12.0 percent.
The BLS report showed that the unemployment rate dropped by 0.2 percentage point to 3.6 percent in March, after dropping by 0.2 percentage point in February. This measure was slightly above the pre-pandemic level of 3.5 percent, which was a five-decade low.
"The strong pace of hiring is being supported by rising labor force participation but is still plenty strong enough to keep the labor market tightening," Sarah House and Michael Pugliese, economists at Wells Fargo Securities, wrote in an analysis.
The labor force participation rate, the share of people employed or looking for work, increased by 0.1 percentage point to 62.4 percent in March, still one percentage point below the pre-pandemic level of 63.4 percent.
"While the jobs market is not the Fed's number one priority at present, today's solid report supports the prospect of a 50 bp (basis point) increase in the fed funds rate at the FOMC (Federal Open Market Committee)'s May meeting," said House and Pugliese.
Swonk said the "largest hurdles" for those who haven't returned to the labor market since the pandemic remain child care and mobility, noting that "many no longer live where jobs are available and/or can't afford the commuting costs associated with expanding their search."
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