March jobs decline back to normal, but no permanent slowdown...yet

When I scrolled by the Bureau of Labor Statstics website on my way to work to check out Friday’s March US jobs report, my immediate reaction was “Wow, these numbers suck.” And that seemed to be the general reaction In the financial news world as well.

Nonfarm payrolls rose 103,000 in March while the unemployment rate was 4.1 percent, falling well short of Wall Street expectations during a month where weather caused havoc on the jobs market, according to a Bureau of Labor Statistics report Friday.

Economists had been expecting a payrolls gain of 193,000 and the unemployment rate to decline one-tenth of a point to 4 percent. The monthly reading was a huge slip from the 326,000 reported in February.

In fact, the 103,000 jobs added are the lowest since Hurricanes Harvey and Irma held down job growth last September, and before that, you have to go back 1 year to March of 2017 to find a lower number.



Now, you may think that disappointing number played a significant role in the stock market’s tank job of 572 points yesterdaay. But I’m not quite sure that’s true, and not just because I think fear about a trade war and a general post-Bubble deflation is a bigger culprit for the Wall Street drop. It’s also because a lot of this 103,000 figure seems to reflect “reversion to the norm” after February’s huge job gains.

If you average out the last 2 months, it doesn’t seem all that out of place from the 10 months prior to that (in fact, it’s slightly higher), and reflects solid job growth continuing in the US for the 8th straight year.

Job growth, Feb-Mar 18 avg. vs Mar 17–Jan 18 avg.
All jobs
Feb-Mar 2018 +214,500
Mar 17- Jan 18 +183,200

Private sector jobs
Feb-Mar 2018 +211,000
Mar 17- Jan 18 +182,700

Sectors such as Construction (-15,000 March, +50,000 for 2 months) and Retail trade (-4,400 March, +42,900 for 2 months) also show this pattern, which indicates to me that perhaps some seasonal adjustments are a bit out of whack with how hiring/firing actually goes in those sectors these days.

Other than the lower payrolls figure, the US jobs report was largely status quo from recent months.

In March, the unemployment rate was 4.1 percent for the sixth consecutive month, and the number of unemployed persons, at 6.6 million, changed little….

In March, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $26.82. Over the year, average hourly earnings have increased by 71 cents, or 2.7 percent. Average hourly earnings for private-sector production and nonsupervisory employees increased by 4 cents to $22.42 in March.

That’s a solid wage gain, although you’d likely expect a little more in a time of full employment.

Manufacturing hourly wage growth lagged behind that, at less than 1.7%. So while manufacturing employment has picked up (+22,000 in March and +232,000 in the last 12 months), the wages have not, which makes you wonder what continues in the coming months, since I don’t think both of those trends can stay together for the long term.

Despite my belief that the Piece of Shit tax bill is awful policy, I don’t think that bad law, its inevitable spiraling deficits, nor the disappointing March jobs report mean that bad economic times are already here. In a few months, I might be changing my tune, but right now I generally see things remaining in the same steady-if-unspectacular growth that we’ve gotten used to for much of the 2010s.

Now, the stock market drops and any readjustments that might come from that and/or the Trump tariffs? That’s something to keep your eyes on between now and the next jobs report in early May. By then, we might have a better idea if things are stalling out in 2018 (as we know they will eventually, likely sooner than later at this point).