Employment Situation: Strong Rebound, Hints of Concern
April 5, 2019
Bottom Line: Nonfarm payroll growth rebounded more than expected in March, climbing 196k with positive revisions to February dtata (33k vs. 20k previously reported). Average hourly earnings rose less than expected, but the workweek increased and prior months' wage gains were revised higher. The unemployment rate was unchanged as the household survey showed a decline in jobs on the month -- this mostly confirms the volatility and difficult data collection over the last few months. Looking through the volatility the trend in both surveys confirm a still solid, if modestly slower, labor market. There are hints of concern -- going forward we'll be watching the manufacturing sector, where job gains have been slow (up just 4k on average in Q1 and down 6k in March).
Payroll Employment rose by 196k in March, compared with market expectations for an increase of 177k. The prior 2 months were revised, higher in February by 13k and higher in January by 1k.
Government jobs ROSE by 14k. Consequently, private sector jobs ROSE by 182k. Overall employment is now 1.7% ABOVE its year ago level, Over the past 12 months, 2,537k jobs have been created.
- In March, the job gains were in Trade, Transportation & Utilities (+7k with -12k of those in Retail Trade),
- Professional & Business Services (+37k with a slip of 5.4k in Temp Help Services),
- Education & Health Services (+61k),
- Leisure & Hospitality (+33k),
- Construction (+16k),
- Other Services (+14k), and
- Financial Activities (+11k).
- Jobs were shed in Manufacturing (-6k).
The Unemployment Rate was UNCHANGED at 3.8%, compared with market expectations for a no change to 3.8%. Household employment fell by 201k while the labor force declined by 224k, resulting in a decrease in the number of unemployed of 24k.
The Labor Force Participation Rate FELL by 0.2 percentage points to 63.0%. The Employment-Population Ratio FELL by 0.1 percentage points to 60.6%.
The number of people Working Part-Time for Economic Reasons ROSE by 195k to 4,439k. while Long-Term Unemployment ROSE by 34k to 1,305k (accounting for 21.0% of the unemployed), while the Mean Duration of Unemployment ROSE by 0.5 weeks to 22.2 weeks.
There are now 6.2 million people officially unemployed. In addition, there are another 5,227k people who say they want a job but are not currently looking for one. Finally, another 4,439k people are working part-time because of slack economic conditions.
The Index of Aggregate Hours ROSE by 0.5%, combining the moderate gain in private payroll employment and the longer workweek.
Hourly Earnings ROSE by 0.1% in March, below market expectations of 0.3%. Hourly earnings are now 3.2% ABOVE their year ago level.
Weekly Earnings also ROSE by 0.4%, the result of the change in hourly earnings and a longer workweek. Weekly earnings are now 3.2% ABOVE their year ago level.
The Average Workweek ROSE by 0.1 to 34.5 hours, in line the market consensus at 34.5 hours.
Article by Contingent Macro Advisors