By Constance Hunter
103,000 jobs were added in the month of March. The lower than expected reading was due mostly to adverse weather in the Northeast. The six month average jobs gain at 211,000 suggests the economic train continues to chug along. Here are my three main takeaways:
- Job gains were broad based with pullbacks in construction and retail mostly weather related. Manufacturing jobs rose 22,000 which is only slightly lower than the six-month average, while motor vehicle and parts jobs rose 3,300, slightly above the six-month average. Healthcare and social assistance jobs, a core job creator, rose 33,800, above the six-month average. As always, it is important to remember the payroll data is volatile and subject to revisions, so one must take jobs growth in line with the broader trends and corresponding data.
- Regarding wages, the slight but steady upward tick confirms that the labor market is healthy but hardly causing significant inflation concerns. Financial services wages were up 5.3% year over year, above the six month average of 4.4% and information worker wages were up 3.8% compared to a six month pace of 3.4%. Meanwhile, construction, an area where surveys suggest significant labor shortages, saw wage gains in line with the broad economy at 2.9%. Overall wages are consistent with this phase of the business cycle.
- Other indicators of labor market health were positive. While the participation rate fell by 1/10th of a percent, this type of fluctuation is normal and should not raise alarm bells. The diffusion index showed that 62.6% percent of firms were hiring. Meanwhile the unemployment rate remained at 4.1% and the broader U-6 rate that captures those involuntarily part-time and marginally attached workers fell slightly to 8.0%. This report allows the Fed to keep its projected 3 rate hikes for 2018 intact. The risks to the outlook do not come from this report but rather from fiscal stimulus that could over heat the economy. The financial markets remain concerned about the fallout from trade rhetoric, but so far the labor market seems on a steady path.