Three takeaways from the March jobs report
By Constance Hunter
The March jobs report brings the 12-month moving average to 211,000 jobs added while the 3- month average is at an extremely healthy 180,000. The unemployment rate remains low at 3.8% and the percent of firms adding jobs is still above 60% although it is softer than in recent months.
This is the longest running streak of consecutive jobs gains in postwar history and it sets the table for this expansion to beat the previous record for longest expansion in recorded U.S. history. In short, the labor market is in a healthy place and the Fed has near perfect conditions to remain in pause mode and to extend the expansion..
Three things to note about the labor market:
- We do expect the number of monthly job additions to slow throughout 2019 and into 2020. This is because the unemployment rate has now spent nine quarters below the natural rate of 4.1% and the number of available workers is declining with the long expansion. By the end of 2019, we expect the economy to be adding jobs at a pace of 145,000 per month.
- The type of jobs being added are now skewing towards middle and upper skill jobs which pay more. This is a good thing for consumption and likely a good thing for productivity in the medium-term. Lower wage jobs grew at 1.6% y/y while middle and high wage jobs grew at 2.1%y/y and 2.2%y/y, respectively.
- The labor market is tightening. While wage growth was subdued this month at 3.2% y/y growth, the increasingly tight labor market suggests, at least at larger firms, wage growth is likely to pick up throughout 2019. The number of people who are long-term unemployed is no longer abnormally high, indicating the labor market is quite strong. A separate report from the BLS on job openings shows they continue to climb as the recovery ages. If one looks at the broad U-6 unemployment measure which accounts for those people who are not looking for work because they have become discouraged as well as those with part jobs and those looking for work, it comprises just under 11 million people. At present there are just over 7.5 million open jobs. The close proximity of the total number of U-6 unemployed and the number of available jobs shows how very tight this labor market has become.
To speak with Constance Hunter about what she expects from the economy, contact Matthew Weiss at email@example.com.