Payroll gains dipped to their lowest in ten months while the unemployment rate fell to a level not seen in almost a decade hinting that despite the disappointing jobs numbers the labor markets remains stable.
The 98,000 increase in March came after negative revisions to January and February's figures cut 38,000 position from their totals, reported the Labor Department in Washington on Friday. The median forecast has been for an addition of 180,000 positions. The unemployment rate dropped to 4.5 percent from 4.7 percent in February, the lowest since March 2007. Average hourly earnings rose 0.2 percent on the month and 2.7 percent on the year from 0.3 percent and 2.8 percent in February. Analysts had predicted the unemployment rate would be unchanged.
The slowdown in March payrolls may be partially weather related as a late winter storm during the survey week dumped as much as two feet of snow on parts of the Northeast. Job increases averaged 187,000 a month last year a pace that was predicted to ease to 181,000 this year. In the first quarter payrolls averaged 178,000.
Other indicators portray a steady if somewhat uncertain labor market. Initial jobless claims were 234,000 in the last week of March continuing their long run at levels normally associated with full employment. The labor force participation rate, while far below its historical norm for the last 30 years, has edged higher lately and reached 63.0 percent in March. It had touched 62.4 percent in 2015, the lowest since the early 1970’s before women began to join the labor force in large numbers. Likewise the annual rate of increase in hourly wages, also well below its historical average since the financial crisis, has moved higher in the past year.
First quarter economic statistics have weakened considerably with the Atlanta Federal Reserve cutting its GDP estimate to 0.6 percent on Friday from 1.2 percent on April 4th citing automobile sales, the Institute of Supply Management non-manufacturing PMI report and the payroll data. The U.S. economy expanded at a 2.1 percent annual rate in the fourth quarter of 2016 and a 3.9 percent pace in the third.
Consumer expenditures in first three months of the year has been unremarkable. Personal spending was largely unchanged in February and demand for autos declined in March as sub-prime car loans fell.
Payroll gains in March were led by a rise in hiring in professional and business services which added 56,000 jobs. Retail firms, hit by the ongoing shift to internet sales, eliminated 30,000 positions. Manufacturing employment rose by 11,000 after a gain of 26,000 in February. These were some of the strongest gains in six years. Construction payrolls climbed by 6,000 last month which followed a 59,000 increase in February.
Private employment increased 89,000 in March after a 221,000 jump in February. Government workers rose by 9,000, the net of a 1,000 cut in federal payrolls and a 10, 0000 addition at state and local levels.
The underemployment or U-6 rate, a gauge that includes part-time workers who would prefer a full-time job and anyone who looked for a job in the past year, fell to 8.9 percent, the lowest since December 2007, from 9.2 percent in February.
The standard U-3 unemployment rate counts part time workers as employed and restricts its unemployed designation to people who have looked for work in the past month, others are considered as not in the labor force. The number of people working part-time who would prefer a full-time fell by 151,000 to 5.55 million.
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