U.S. Outlook: Job growth bounces back in March
Despite a weaker than expected ADP employment report that seemed to highlight downside risks to today’s jobs numbers, the Bureau of Labor Statistics reported a stronger than expected rebound in nonfarm payrolls in March.
Nonfarm employment increased 196K last month from an upwardly revised 33K gain in February. The net upward revision for January and February payrolls was a solid 14K jobs. Clearly, fears that U.S. job growth was going to rapidly deteriorate following February’s much worse than expected original estimate of 20K jobs were wildly exaggerated. However, don’t celebrate the nonfarm payroll jump in March too heartily. There are signs below the surface of today’s headline jobs gain that the U.S. labor market could be in for a rougher time ahead.
For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on April 5.Key observations:
- U.S. job growth is decelerating, just not at the pace that would herald the arrival of an economic recession.
- In the March jobs report, we saw net job losses of 6K in manufacturing and 12K jobs in retail trade. These sectors tend to be some of the more cyclical sectors for employment so increasing job loss here could be a sign of slower overall job growth ahead.
- After jumping 0.4 percentage points in February, average hourly earnings growth managed only a 0.1 percentage point gain in March and the year-on-year increase slipped to 3.2% from 3.4%.
- The three-month average annualized growth rate is even worse at 3.0%. This is not the trend we need see in order to sustain real consumer spending at last year’s pace, or to stoke an acceleration in core consumer inflation back to the Fed’s 2.0% target