The Bureau of Labor Statistics reported that the economy added 431,000 jobs in March which was slightly below consensus estimates of 490,000 and a deceleration from 750,000 jobs added in February. However, it was a strong report overall as the unemployment rate reached 3.6%. It's also potentially a sign that jobs gains will be limited even if the economy remains strong simply because we are closer to full employment barring a huge upturn in the labor force participation rate.

Stocks were higher in the early hours of trading but gave up these gains into the afternoon session. The yield on the 10-year also initially spiked higher but most of these gains were reversed. Overall, the report is not likely to change anything in terms of people's assessment of the economy or the Federal Reserve's rate hike intentions.

The U-6 unemployment rate, which includes discouraged workers and those holding part-time jobs, dropped 0.3% to 6.9%. The labor force participation rate increased by 0.1% to 62.4%, within 1% of its pre-pandemic level. Average hourly earnings increased 0.4% at monthly rate and 5.6% on an annual level.

Leisure and hospitality led job creation with a gain of 112,000, while retail added 49,000 jobs. Other contributors were professional and business services with 102,000 and manufacturing adding 38,000. Including positive revisions were January and February, a total of 1.7 million jobs were added.

The hospitality industry has the biggest gap in terms of now and pre-pandemic with sales 8% below 2019 levels and 1.5 million jobs. It's estimated that 90,000 businesses in this space closed down. This remains the biggest potential source of job growth for the economy.

In total, there is a gap of 5 million between job openings and workers which is adding to inflation pressures. Nothing about this report is going to slow or alter the Fed's rate hike schedule as the central bank remains focused on tamping down inflation. Currently, Fed futures markets are forecasting between six and seven hikes this year with above 50% odds of a 50 basis point hike in May. There has also been speculation about an intra-meeting hike.