U.S. Employment Situation – Mar 2018

Released Friday, April 6, 2018

downloadsNonfarm Payrolls: +103,000 month-over-month (Cons: +185,000), +2.26 million year-over-year
Unemployment Rate:
4.1% (Cons: 4.0%), Unchanged month-over-month, -0.4 ppt year-over-year
Weekly Hours:
34.5 hours (Cons: 34.5 hours), unchanged month-over-month, +0.2 hours year-over-year
Hourly Earnings:
$26.82, +0.3% month-over-month (Cons: +0.3%), +2.7% year-over-year

Quick Take:
Private payrolls increased by 103,000 in March, which was below economists’ estimate. February and January payroll gains figures were revised down by 50,000 collectively. March’s monthly payroll gain was the lowest since September 2017 when hurricanes held down job gains. That said, March’s payroll gains came after a significant increase in February, which was the highest in 28 months.

Over the past 3 months, payroll gains have averaged 202,000 monthly additions, higher than the average of 182,000 in 2017. Despite noisy payroll data over the past several months, the labor market continues to absorb remaining labor market slack as the economy gradually approaches full employment.

Average hourly earnings growth was in-line with expectations in March, growing 0.3% month-over-month. On a year-over-year basis, average hourly earnings for all employees rose 2.7% in March, up from 2.6% growth in February and 2.3% in October 2017. As diminishing labor market slack makes skilled workers harder to find, we expect wage growth to modestly accelerate.

In March, the labor force participation rate declined 0.1 ppt to 62.9% from 63.0% in February. The participation rate has ranged between 62.7% and 63.0% for 22 consecutive months. However, the participation rate for people aged 25-54 (prime age workers) has risen 0.4 ppt over the past year to 82.1%. A further rise in prime age participation should tighten labor markets further.

Notable Data:
March payroll gains were strongest in the professional and business services (+33,000), education and health services (+25,000), and trade, transportation, and utilities (+21,000) industries. Payrolls declined in the construction (-15,000) and retail trade (-4,000) industries, which saw outsized gains in February of +65,000 and +47,000, respectively.

The unemployment rate held steady at 4.1% in March for the sixth consecutive month, the longest streak of steady readings since 1969. The unemployment rate has fallen -0.4 ppt over the past year.