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Real Time Insight

At first blush, the March Fed payroll number was weak. That may not be the right takeaway from this report.  The right takeaway may be this economy has not changed at all with the introduction of the latest Bond Buying in December. 

Given the lags, that makes more sense than the market thinks.

Consider all the facts we recieved.  Yes, the Labor Dept.’s non-farm payroll number edged up in March +88,000. However, the change in total nonfarm payroll employment for Jan was revised up from +119,000 to +148,000.  Change for Feb was revised up from +236,000 to +268,000. Over the prior 12 months, jobs growth averaged +169,000 per month.

It looks like Jan added +30K more than preliminary numbers said.  Feb added +30K more.  Tack the +60K revisions onto the +88K and, lo and behold, we get to +148K net additions over the last three months.  The U.S. economy needs +125K a month to supply a labor force growth rate of +1% a year.  Once again, this macroeconomic ship is on the same course it has been on over the last three years.

Payroll growth of this magnitude knocks out +0.5% from the unemployment rate each year. 

The unemployment rate moved to 7.6% from 7.7% in March.  Other data on the workweek, earnings, overtime etc. was unchanged or moved very little.

The Fed is likely convinced its base case for moving the short rate in mid-2015 is safe.  Bond buying timelines are not going to change either.

Long-time, usual, suspects ended up in the Up Sector and Down Sector columns.  

See below:

Up Sectors

Professional and business services added +51,000 jobs.

Health care had a gain of +23,000, similar to the prior 12-month average.

Construction employment continued to trend up, by +18,000. Jobs in specialty trade contractors increased by +128,000 since September.  The gain is about equally split between residential and nonresidential components.

Within leisure and hospitality, employment in food services and drinking places continued to trend up in March by +13,000.

Down Sectors

In March, retail trade employment declined by -24,000. The industry had added an average of +32,000 jobs per month over the prior 6 months. In March, job declines occurred in clothing and clothing accessories stores (-15,000), building material and garden supply stores (-10,000), and electronics and appliance stores (-6,000).

Within government, U.S. Postal Service employment fell by -12,000 in March.

Other Data

The average workweek for all employees on private nonfarm payrolls increased +0.1 hour to 34.6 hours. The manufacturing workweek decreased by -0.1 hour to 40.8 hours, and factory overtime rose by +0.1 hour to 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.8 hours.

In March, average hourly earnings for all employees on private nonfarm payrolls, at $23.82, changed little (+1 cent). Over the year, average hourly earnings have risen by 42 cents, or 1.8 percent.

 

Chime in below.  What is your takeaway from the latest jobs numbers?

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