March Jobs Numbers Disappoint

Despite a drop in the overall unemployment rate to its lowest level in 10 years, total nonfarm employment rose by just 98,000 jobs in March.

The Bureau of Labor Statistics on Friday reported the unemployment rate decreased by 0.2 percentage point to 4.5 percent in March, while the number of unemployed persons declined by 326,000 to 7.2 million.

BLS revised total nonfarm payroll employment for January from +238,000 to +216,000 and revised down February numbers from +235,000 to +219,000. With these revisions, employment gains in January and February combined were 38,000 less than previously reported. Over the past three months, job gains averaged 178,000 per month.

The report said persons unemployed less than five weeks declined by 232,000 to 2.3 million. Long-term unemployed (those jobless for 27 weeks or more) was little changed over the month at 1.7 million and accounted for 23.3 percent of the unemployed. Over the past 12 months, the number of long-term unemployed fell by 526,000.

BLS said the labor force participation rate held at 63.0 percent in March; the employment-population ratio, at 60.1 percent, changed little. The employment-population ratio has edged up over the year, while the labor force participation rate has shown no clear trend.

John Silvia, chief economist with Wells Fargo Securities, Charlotte, N.C., attributed the “disappointing” March job gains e to retail trade restructuring and some weather effects. Nonetheless, he said wage gains are consistent with labor productivity and inflation trends should keep the Federal Open Market Committee on track for a June federal funds rate increase.

“Strength in the household survey in March suggests the payroll survey likely exaggerates any weakening in the labor market,” Silvia said. “The unemployment rate fell to a new cycle low of 4.5 percent. Encouragingly, the decline was driven entirely by more workers finding employment while the participation rate held steady. Broader measures of labor market slack also signaled that the labor market is tightening.”

However, Mark Fleming, chief economist with First American Financial Corp., Santa Ana, Calif., said the March report signaled “continued good news for the economy.”

“While the increase of 98,000 non-farm payroll jobs is significantly lower than the recent trend, it is important to note that we have had consistent year-over-year expansion of the labor force for six-and-a-half years now,” Fleming said. “The total number of non-farm payroll employees is more than 10 percent higher than at the end of the recession and six percent higher than before the recession. The even better news is the drop in the unemployment rate to 4.5 percent, a level not seen since May 2007, almost a decade ago.”

Fleming noted construction employment, which needs to expand to increase the pace of housing starts and expand the housing stock, was a disappointment with only 6,000 new jobs reported. “The pace of construction job growth has been declining on a year-over-year basis since the beginning of 2016, in recent months averaging only 2-3 percent,” he said. “Home builders are reporting that the lack of construction workers is hampering their ability to build homes, which is a desperately needed source of supply, as most markets already have very tight inventories of homes for sale. In fact, we have been underbuilding residential housing relative to demand since 2009.”

BLS reported the average workweek for all employees on private nonfarm payrolls was unchanged at 34.3 hours in March. In manufacturing, the workweek edged down by 0.2 hour to 40.6 hours, and overtime edged down by 0.1 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.5 hours.

The report said average hourly earnings for all employees on private nonfarm payrolls increased by 5 cents to $26.14, following a 7-cent increase in February. Over the year, average hourly earnings have risen by 68 cents, or 2.7 percent. In March, average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $21.90.