 | Nonfarm payrolls increased 192,000 in March |
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| Posted Under: Data Watch • Employment |
Implications: The March employment report was more Plow Horse, with some signs of underlying improvement as weather-related problems eased. The unemployment rate held at 6.7% instead of ticking back down to 6.6%, as we expected, but the details of the report were much better than the headlines. Payrolls increased 192,000 in March, or a total of 229,000 after including upward revisions for prior months. Including revisions, private payrolls gained 239,000. What kept the unemployment rate from falling was a 503,000 gain in the labor force, which counteracted the robust 476,000 gain in civilian employment in March– an alternative measure of jobs that includes small business start-ups. The Household Survey shows jobs up 2.3 million in the past year, slightly beating the 2.2 million increase in nonfarm payrolls and overwhelming the 1.1 million increase in the labor force. The result is a decline in the unemployment rate from 7.5% to 6.7%. Historically, when civilian employment grows faster than payrolls, it's a sign of faster job growth ahead. Given recent gains in the labor force, the participation rate finally appears to be leveling off; at 63.2% it's the highest in six months and down only slightly from 63.3% in March 2013. The worst news in today's report was that after increasing 0.4% in February, average hourly earnings were unchanged in March. We think this was weather-induced volatility. Total hours of work fell 0.1% in February, but surged 0.7% in March. So, despite flat hourly earnings, total cash earnings increased 0.7% in March, the fastest gain in four months. Total cash earnings are up 4% versus a year ago, providing plenty of fuel for consumer spending. Part-time employment increased 414,000 in March, helping boost the more expansive U-6 definition of the unemployment rate to 12.7% from 12.6%. But the increase in part-timers follows a drop of 1.1 million in the prior seven months. In the past year, part-time employment is up only 180,000, which means it's been a shrinking share of the workforce. As we always remind our readers, the labor market could and would be doing better with a better set of public policies. But it's still improving. In the past year nonfarm payrolls have grown at an average monthly rate of 187,000 while civilian employment is up 196,000 per month. We expect continued Plow Horse gains in the months ahead.
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