United States: Job growth surprises to the downside in March
April 7, 2017
After two months of remarkable performance in the U.S. labor market, employers largely turned away from hiring in March. Non-farm payrolls grew by 98,000 jobs in the month, well below market expectations of 180,000 additional jobs. The reading also marked a deceleration from the downwardly revised increase of 219,000 jobs in February (previously reported: +238,000). March’s print casts further doubts on the health of the U.S. economy, with hard data failing to live up to the expectations of buoyant consumer and business sentiment readings.
March’s result shows that job creation continues to be driven mostly by the private sector, adding 89,000 new jobs, while the public administration added 9,000 jobs. Manufacturing employment—one of President Donald Trump’s mainstays during his campaign—continued to add jobs in March, although at a slower pace. The recent recovery in exports and commodity prices appears to have buttressed hiring activities among industrial sectors. Nonetheless, a harsher winter in March saw construction payroll gains almost stagnating, which partially explains the deceleration in the headline figure.
The unemployment rate, however, fell from 4.7% in February to 4.5% in March, the best reading since May 2007. With the size of the workforce largely unchanged and the labor participation rate stable at 63.0% in March, the result largely stemmed from the household survey with which the indicator is calculated. Households noted a 472,000 gain in employment, following February’s 447,000 increase. The disparity with the business survey—used to calculate the increase in non-farm payrolls—argues against reading too much into this month’s data.
Author: David Ampudia, Economist