U.S. job creation bounced back sharply last month, renewing optimism that the labor market was still on track following a sharp slowdown in February. The jump in nonfarm payrolls thrust Dow futures toward a major rally.

Nonfarm Payrolls Rebound

Employers added 196,000 workers to payrolls last month, well above the 175,000 expected, the Department of Labor reported Friday in Washington. The February tally was revised up to reflect a gain of 33,000 from a previously reported 20,000. It was still the weakest since September 2017.

The unemployment rate held steady at 3.8% even as workforce participation increased to 63.0% from 62.9% previously. Sometimes unemployment rises as workforce participation increases. That’s because the ‘unemployment rate’ reflects the segment of the working-class population not employed but actively searching for work. Those who are not ‘actively searching’ fall out of the labor market entirely.

Average hourly earnings, a proxy for wage inflation, rose just 0.1% in March. Analysts had called for a monthly gain of 0.3%. Annually, earnings climbed 3.2%, official data showed.

The official numbers came in far higher than the advance estimate from ADP earlier this week. On Wednesday, the payrolls processor reported a net gain of 129,000 private payrolls for the month of March.

Dow Futures Climb as Investors Breathe Easy

A solid hiring rate alleviates concerns that the U.S. economy was barreling toward recession, a fear that was recently reflected in the bond market. Despite being at or near full employment, the U.S. labor market has added in excess of 190,000 jobs in nine of the past 12 months. Wages have also increased substantially since Trump was elected.

U.S. stock futures were trading higher shortly after the nonfarm payrolls report was released at 8:30 a.m. ET. Dow Jones mini futures climbed 107.00 points to 26,495.00. The S&P 500 futures contract gained 7.75 points to 2,890.50. The Nasdaq 100 mini futures contract was up 27.50 points at 7,589.00.

After a stellar first quarter, the Dow and broader U.S. stock market find themselves inching closer to record highs. Pre-market activity on Friday suggests that the major indexes are on track for a strong open.