Miss on jobs report not as bad as it seems

By Constance Hunter

Today's jobs report showed a gain of only 20,00 new jobs. One needs to consider three main factors:

An absence of the federal E-Verify system during the shutdown probably lowered February data. An upward revision, or rebound in March is quite likely.
The three-month average of 186,000 jobs is in line with our estimates that the pace of job growth would slow over the course of 2019.
Wages are up 3.4% in February vs. 3.2% in January. This signifies labor market strength despite the headline number. The composition of wage gains is heavily skewed to lower wage jobs like retail (5.0%), and leisure and hospitality (4.1%) which is also a good indicator that consumption should remain healthy in 2019.

With that said – the job market should gradually add fewer jobs as the recovery ages. Looking at the graph below one can see that the six-month average shows a downward trend in three key sectors of the economy: construction, goods producing/manufacturing, and professional and business services.

While the slope of these lines may flatten with revisions or a March rebound, it is unlikely they will reverse. The pace of the expansion is expected to slow over the course of the next several quarters and a slower pace of jobs growth is consistent with this expectation.