There was a lot of important information on the U.S. economy released this week but the biggest data point is without a doubt the latest monthly job report from the Bureau of Labor Statistics (BLS) out this morning. Indeed, total nonfarm employment in America rose by just 98K payrolls in March, significantly worse than economists had expected and the smallest monthly increase since May of last year. There were a few clear signs of negative weather effects in the March payrolls report, likely related to the snowstorms in the Northeast that temporarily prevented many Americans from getting to work. However, both the January and February payrolls figures were revised lower, which together with the disappointing March print helped pull down the 3-month (less-volatile) average payrolls gain to +178K, the worst reading since December. It is worth remembering, though, that such a figure is still well above many Federal Reserve (Fed) officials’ estimates for what is needed to keep up with U.S. population growth. Further, this was the 78th monthly payrolls gain in a row, therefore maintaining one of the longest stretches of U.S. job growth on record.
Under the hood, providers of professional and business services drove job creation in March but U.S. manufacturers also posted another notable gain as employment in the goods-producing sector continued to rebound. Retailers were the main weak spot last month, not surprising since many brick-and-mortars continue to close due to increased competition from online merchants (Amazon). As for joblessness in America, the official unemployment rate (U-3) fell to 4.5 percent in March, and the underemployment rate (U-6) slid to 8.6 percent, both at the best levels of the current business cycle. At the same time, the labor force participation rate in America held at 63.0 percent in March, a 12-month high. Shifting the focus to wage growth, average hourly earnings rose by 0.2 percent last month, below the 0.3 percent gain that was anticipated but the February figure was revised slightly higher. As a result, wages have now grown by 2.7 percent over the past twelve months, one of the best readings of the current economic cycle but still weak compared to past expansions. Moreover, for many Americans it now seems that finding any job is less of a problem than finding a job that perfectly matches their skill-set. This is evidenced by a recent Federal Reserve Bank of New York study which found that 44 percent of recent college graduates are employed in positions that do not even require a degree.
Sources: Econoday, Bloomberg, Twitter, U.S. DoL, FRBSLPost author: Charles Couch