March Madness Makes for a Miss in the Jobs Report
- Payroll Employment increased by just 103,000 jobs in March, well below consensus expectations.
- The Unemployment Rate for March was unchanged at 4.1 percent.
- Average Hourly Earnings increased by 0.3 percent in March.
- The Average Workweek in March remained at 34.5 hours.
After the blowout jobs report in February, March brought us back to earth with a net gain of just 103,000 payroll jobs for the month. This was well below consensus expectations of about +185,000. At face value this looks like a big miss, especially when compared to the strong ADP Employment Report for March issued on Wednesday, which showed a net gain of 241,000 private-sector jobs for the month. However, given the robust payroll gains of February, which were revised up to +326,000 for the month, the March gain of 103,000 looks like a normal reversion to the trend. For the first three months of 2018, we are now averaging a net gain of 202,000 net new jobs per month, which is very healthy given the maturity of the business cycle. In March, the popular measure of unemployment, the U3 unemployment rate, remained at 4.1 percent for the sixth consecutive month. However, the broader U6 unemployment rate, which includes marginally attached workers, fell two-tenths of a percent to 8.0 percent, consistent with tight labor market conditions. There was some pressure on wages in March with average hourly earnings up by 0.3 percent month-to-month, and 2.7 percent year-over year, also consistent with a tight labor market. The average workweek was unchanged at 34.5 hours.
Most industries looked normal-to-soft in terms of job growth. The big swing over the last two months came from construction. Employment in resources and mining increased by a respectable 8,000 for the month. Construction employment dropped by 15,000 in March, after a huge 65,000 job gain in February. An increase of about 20,000 would be a good month for construction. Manufacturing employment was surprisingly strong again, up by 22,000 net new jobs. Wholesale trade added 11,400. Retail was soft, dropping 4,400 jobs in March. Transportation and warehousing industries increased employment by 9,800. Both information services and financial services were subdued, adding 2,000 each. Professional and business services added a steady 33,000 net new jobs. Education and healthcare gained 25,000. Leisure and hospitality industries were also subdued, adding 5,000 net new jobs. The government sector increased employment by just 1,000 net new jobs in March.
Market Reaction: U.S. equity markets opened with losses. The 10-Year T-bond yield is down to 2.81 percent. NYMEX crude oil is down to $63.43/barrel. Natural gas futures are up to $2.71/mmbtu.
For a PDF version of this report click here: Employment-04062018.
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