March U.S.
Employment Report Disappoints
The U.S. Labor
Market Report covering the national employment situation in March showed weaker
than expected job gains but a stronger than anticipated increase in wages. The
labor market added 126,000 jobs last month, while the unemployment rate held
steady at 5.5%. Average hourly earnings increased by $0.07 in March to $24.86.
Over the year, average hourly earnings were up by 2.1%, well ahead of
inflation.
The
employer payroll survey reported that total nonfarm employment in the United
States increased by 126,000 jobs in March, ending a 12 month streak of jobs
gains north of 200,000. Accompanying
last month’s weak job growth figure, were downward revisions to prior months.
The January employment number was revised from 239,000 jobs added to 201,000
and the change for February was revised from a gain of 295,000 to 264,000.
On
a year-to-year (YTY) basis, U.S. employment expanded by over 3.1 million jobs,
an increase of 2.4%. Every major industry sector added jobs over the year. The
fastest growing sectors in percentage terms were construction (4.7% or 282,000
jobs); professional and technical services (3.7%, 307,500 jobs); administrative
and waste services (3.6%, 305,500 jobs); transportation and warehousing (3.6%,
163,600 jobs); and leisure and hospitality (3.4%, 490,000 jobs). The
manufacturing sector also continued to add jobs on a YTY basis. Jobs in durable
goods were up by 2.2% (171,000 jobs), while employment in nondurable goods
inched up by 0.4% adding 17,000 jobs.
The
unemployment rate was unchanged over the month at 5.5%. The year ago rate was
6.6% and the monthly rate has averaged 6.1% since January 1990. Last month
96,000 individuals left the labor force causing the labor force participation rate
to tick down 0.1 percentage point to 62.7%. Labor force growth is an important
indicator of future economic growth – a decline in labor force creates a labor
supply constraint. Over the next several years the BLS projects labor force
growth will be due entirely to population growth and that the labor force
participation rate will continue to decline.
Other labor market
indicators in the March report showed improvement. The more comprehensive U-6
unemployment rate, which counts part-time workers who would prefer full-time
work and persons who would like to work but have given up looking for a job
fell to 10.9% from 12.6% a year ago.
In another
encouraging development, someone who was out of work in March would have needed
a little over 12 weeks on average to find a new job compared with nearly 16
weeks in March of last year. Improvements in the labor market have also helped
bring down the share of workers who have been jobless for 27 weeks or more. In
March, that share was 29.8% versus 35.4% in March 2014. Over the year, the number of long-term
unemployed persons (not counting individuals who have given up looking for
work) has fallen by over 1.1 million. Since 1990, the percentage of long-term
unemployed has averaged 25%, reaching as high as 45% in 2010. The share of
part-time workers is also approaching normal levels, coming in at 18.7% in
March compared with the long-run average share of 18.0%
Summary: Job growth slowed
in March and the two previous months were revised downward. Job gains over the
past three months slowed to an average 197,000 – a more modest pace compared
with the second half of 2014. Weather likely played a role in the slowdown, similar
to what occurred last year. Still, at
5.5%, the unemployment rate is at its lowest since May 2008 and a broad set of
industry sectors posted job gains. Moreover, industries that have been the
biggest source of job gains locally continued to trend upward nationally in
March.
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