March back into the black: 196,000 jobs added, unemployment steady at 3.8%


So much for the winter doldrums. After an unexpected pothole in job creation in February, the US economy rebounded in March to add 196,000 jobs. Unemployment remained steady, although that came in part from a slight drop in the labor force. The news was especially good in the health-care industry:

Total nonfarm payroll employment increased by 196,000 in March, and the unemployment rate was unchanged at 3.8 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in health care and in professional and technical services.  …

Total nonfarm payroll employment increased by 196,000 in March, with notable gains in health care and in professional and technical services. Employment growth averaged 180,000 per month in the first quarter of 2019, compared with 223,000 per month in 2018. (See table B-1.)

Health care added 49,000 jobs in March and 398,000 over the past 12 months. Over the month, employment increased in ambulatory health care services (+27,000), hospitals (+14,000), and nursing and residential care facilities (+9,000). Employment in professional and technical services grew by 34,000 in March and 311,000 over the past 12 months. In March, computer systems design and related services added 12,000 jobs. Employment continued to trend up in architectural and engineering services (+6,000) and in management and technical consulting services (+6,000).

Wage growth continued at a modest pace, ticking up four dollars a week, and the average workweek expanded a little as well. For that matter, the revisions to previous months were all modestly positive, adding in 14,000 more jobs than previously reported in the last two months combined.

Although the actual figures in the Household survey for the labor force dropped a bit, that measure is notoriously volatile anyway. The labor force participation ratio remained steady at 63.0%, on the high side of a narrow spectrum over the past six years, and the employer-participation ratio remained even steadier at 60.6%. That measure hasn’t deviated more than a tenth of a point in the last six months.

Altogether, it’s a good but not spectacular report. The three-month rolling average now stands at 180,000, which exceeds the maintenance level needed for population growth but doesn’t indicate a rapid expansion. To some extent, we may not have the labor capacity any longer to feed a rapid expansion, with the growth over the last two years eating into the overhang from the Great Recession. The uptick in wages and hours also reflects that status as labor gets tight and employers have to offer more hours and better compensation to compete for it.

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CNBC’s Jeff Cox also calls it a rebound, although he notes that wage growth slowed up a little:

Job creation posted a solid rebound in March, with nonfarm payrolls expanding by 196,000 and the unemployment rate holding steady at 3.8%, the Bureau of Labor Statistics reported Friday.

That was better than the 175,000 Dow Jones estimate and comes after a dismal February that had economists wondering whether the decade-old economic expansion was nearing an end. The unemployment rate met expectations.

Wage gains fell off the recent strong pace, increasing just 0.14% for the month and 3.2% year over year, below expectations of the 3.4% pace from last month. The average work week increased by 0.1 hour to 34.5 hours. …

Broadly speaking, the report is likely to restore some confidence in a labor market that had looked shaky and an economy whose prospects were equally uncertain.

Reuters also notes that wage growth slowed in March, but Lucia Mutikani writes that the overall report should rebut fears that the economy might be heading into recession:

U.S. employment growth accelerated from a 17-month low in March as milder weather boosted activity in sectors like construction, which could further allay fears of a sharp slowdown in economic growth in the first quarter. …

The economy has shifted into lower gear as stimulus from the Trump administration’s $1.5 trillion tax cut package as well as increased government spending fades. A trade war between Washington and Beijing, and slowing global growth have also taken a toll on the economy, which in July will celebrate 10 years of expansion, the longest on record.

The employment report added to fairly upbeat construction spending and factory data that led Wall Street banks to boost their growth estimates for the first quarter.

If Donald Trump can cut a deal with China, there may still be some untapped potential for bigger growth and with it more wage competition. That will likely not get settled in April, though, so perhaps we should expect this modest level of growth to be the best-case scenario for a while.

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