March Jobs Report Signals A Return to Solid Employment Growth
The U.S. employment situation exceeded expectations for the previous month. According to the March Bureau of Labor Statistics report, Nonfarm employment increased by 196,000 in March, ahead of the expected market increase of 175,000. This unexpected surge bypassed the disappointing addition of 20,000 in February, which has been revised up to 33,000.
Among the major employment industries, food service experienced the biggest boost, raining in just above 27,000, which continued its upward trend over the prior 12 months. Employment in construction showed little change in March (+16,000) but has increased by 246,000 over the past 12 months.
Through the first three months of the year, employers added an average of 180,000 jobs to payrolls each month. That is a slowdown from the 223,000 jobs added each month, on average, last year, and roughly in line with the 179,000 averaged in 2017.
“The 196,000 jobs added to the U.S. economy in March reversed the slowdown in February, but more importantly, it showed that job creation overall remains robust,” Mortgage Bankers Association Vice President of Economic and Industry Forecasting Joel Kan said.
What is the cause of the unexpected boost? Some would point to the increase in average hourly earnings. Per the Bureau of Labor Statistics, in March, the average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $27.70, following a 10-cent rise in the prior month. Four cents may not seem like much, but through the course of a year, employees would see an additional an increase of over a thousand dollars in their bank accounts. Over the year, average hourly earnings have risen by 3.2 percent.
February’s low projection appears to be an anomaly, according to Joshua Wright, Chief Economist for iCIMS. “One of the things that (has) been most remarkable over the last ten years has been just how steady the labor market expansion has been,” Wright said. Following February’s results, the U.S. economy added new jobs for its 101st consecutive month. “Normally when you have an expansion go on this long, job growth dips into negative territory every now and then,” he said. That may explain the dip experienced in February.
However, despite the boost in jobs, the unemployment rate continued at a historic low rate of 3.8 percent with the number of unemployed hovering around 6.2 million. Broken down, employment rates for adult men were 3.6 percent, adult women 3.3 percent, teenagers 12.8 percent, blacks 6.7 percent, Asians 3.1 percent, and Hispanics at 4.7 percent. Marginally attached individuals, or, those who were not in the labor force but wanted employment, hung at 1.4 million. After a brief slowdown in February, things seem to be headed back in a more favorable direction.
ThinkWhy™ It Matters: ThinkWhy analysts understand that the reason behind the increase in jobs will be debated by everyone from political pundits to social media keyboard warriors. Just as the economy seemed on the fringes of something bad from the minimal addition of 33,000 jobs in February, we should always take caution when projecting fate of the U.S. economy. ThinkWhy economists continue to forecast healthy job gains, like in 2018, through 2019. Current pace of gain should take us to approximately 2.2 million jobs or a little over 200,000 jobs per month average for 2019.