US jobs keep growing in March, but only in a few areas

With the first Friday of the month comes another US jobs report, which had gotten a bit more attention after February had a significant drop in job growth, along with some other signs that perhaps the nearly 10-year economic expansion was running out of steam.

Well, looks like things are still OK, as March ended up being a typically decent month for growth.

The U.S. economy added a surprisingly robust 196,000 jobs in March, the Labor Department reported on Friday, rebounding from a weak month that prompted markets to question the strength of the labor market.

March’s jobs data exceeded the expectations of Wall Street economists, who were expecting the economy to add 175,000 non-farm payrolls in March, according to data compiled by Bloomberg. Meanwhile, February’s sharply lower-than-expected 20,000 job additions were revised up to 33,000.

The unemployment rate checked in at 3.8%, the same pace of increase as in February, according to consensus economists polled by Bloomberg….

February’s soft reading “really it looks like an anomaly,” Joshua Wright, chief economist for iCIMS, said in an interview with Yahoo Finance. His firm’s model estimated that the economy added 160,000 non-farm payrolls in March.

The current three-month trend in non-farm payroll additions stands at a still-healthy 186,000, thanks to much higher job creation in January and December.

So, no imminent recession or stall-out, at least on the jobs side. More of a return to the norm after a high number in January and a low one in February.

However, as you go further into the report, you see that the growth was uneven, as some sectors had major increases, while others continued to slide.

Top job gainers, March 2019
Health care and social assistance +61,200
Professional and technical services +34,100
Food services and drinking places +27,300
Construction +16,000
EVERYTHING ELSE +53,400

Top job losers, March 2019
Retail trade -11,700
Manufacturing -6,000

Both of those losses are concerning. Retail has now lost nearly 32,000 jobs in the last 2 months on a seasonally-adjusted basis, and it seems likely that more losses are set for the coming months, as many store closings were announced in the last couple of months after the Christmas shopping season, and are only starting to happen now.

Manufacturing also has seen its previously-hot job growth slow down to start 2019. February only added 1,000 jobs nationwide, and March was the first monthly loss in the sector in more than 2 years. And looking ahead, it doesn’t look great for manufacturing either, as reports in the last week shows that manufacturing inventories were rising while sales were falling in January, while new orders in manufacturing fell by 2.3% in February.

The unemployment rate is still below 4%, but 199,000 fewer people claimed to be employed in March, and the rate only stayed at 3.8% because 224,000 dropped out of the work force. It’s the third straight month the labor force has declined, and the year-over-year increase in the number of people “employed” is the smallest it’s been in more than 2 years. Both statistics indicate we may be maxed out at this point.

As for wages, they surprised me by continuing to go up by 4 cents in March after a hefty 10 cent increase in February. I worried that wages may drop since February had fewer part-time workers due to horrid weather in the week of the survey, but it didn’t, and year-over-year wage growth is at a solid 3.2%. Manufacturing was a downside, as their hourly wages did decline by 5 cents an hour, and are only up 1.8% over the last 12 months measured.

My final analysis- yes, the topline number for March’s jobs report looks decent, and Q1 2019 will be yet another quarter of growth. But the lower manufacturing and retail employment combined with a stagnating labor force means there are some worrysome signs for the future, and I wonder if this is truly as good as its going to get (which already isn’t that great for much of the country).