So much for the “blowout” …. again. For the second straight month, the economy failed to meet expectations for job creation, heightened by wildly optimistic data from ADP. The US added only 98,000 jobs in March, while the Bureau of Labor Statistics revised the previous two months downward by more than a third of March’s growth. It’s the lowest number of added jobs in a year:
The unemployment rate declined to 4.5 percent in March, and total nonfarm payroll employment edged up by 98,000, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services and in mining, while retail trade lost jobs.
ADP projected a gain of 263,000 jobs on Wednesday, which had some economists skeptical — but who still upgraded their projections. This was a miss even to their less optimistic original expectations. A gain of 98,000 isn’t even a maintenance level of job creation in relation to population growth, which requires between 135K-150K jobs added each month. Add that up with the 38,000 in downward revisions for January and February, and the job creation picture looks much less rosy than assumed over the first quarter of the year.
The big loss comes in the retail sector, which has been declining for six months, and it’s not being made up in bigger-salary sectors:
Retail trade lost 30,000 jobs in March. Employment in general merchandise stores declined by 35,000 in March and has declined by 89,000 since a recent high in October 2016. Employment in other major industries, including manufacturing, wholesale trade, transportation and warehousing, information, leisure and hospitality, and government, showed little or no change over the month.
The loss in retail jobs is curious, too. Consumer confidence hit a new high in March, part of an upward trend that started in … October 2016. We’ll get the 2017 Q1 GDP report at the end of the month, but the trend on personal consumption expenditures was good for the last three quarters of 2016, finishing with a 3.5% annualized quarter-on-quarter increase in Q4. Some big-box chains are struggling at the moment — JC Penney, Sears among them — so perhaps it’s more of an adjustment within the sector.
There are some bright spots. The U-3 number dropped from 4.7% to 4.5% while the civilian labor force increased by 145,000 — roughly population growth. The participation rate stayed at 63.0% and the employment-population ratio ticked upward a tenth of a point to 60.1%. The historical databases were unavailable this morning, so the U-6 number was not accessible, but the drop in the U-3 number would suggest that it remained stable from last month, at least.
CNBC, which on Wednesday was hailing the possibility of another “blowout” month of job creation, says that the US economy whiffed badly in March:
Nonfarm payrolls grew by just 98,000 in March though the unemployment rate fell to 4.5 percent, according to a closely watched report Friday from the Bureau of Labor Statistics.
Payrolls had been expected to increase by 180,000 in March, according to economists surveyed by Reuters.
“What a number. This makes your jaw drop,” said Naeem Aslam, chief market analyst at Think Markets.
The AP’s Christopher Rugaber applies more equanimity in his analysis:
U.S. employers added just 98,000 jobs last month, the fewest in a year, though the unemployment rate fell to a nearly seven-year low of 4.5 percent.
The rate fell because nearly a half-million more Americans reported finding jobs, the Labor Department said Friday.
Economists had expected a falloff in hiring in March after job gains in January and February had averaged a robust 237,000. Those increases had been fueled partly by strong hiring in construction, which occurred because of unseasonably warm winter weather.
Rugaber also reminds readers that a large contingent of potential workers still remains on the sidelines:
Many economists expect hiring to fall back eventually to last year’s pace or even lower as the unemployment rate declines and companies struggle to fill jobs. Yet hiring could remain strong if more Americans come off the sidelines and start looking for work again. The proportion of Americans who are either working or looking for work remains far below pre-recession levels.
In other words, it appears that better weather and perhaps some premature exuberance over the economic policies of the new administration drove hiring in the previous two months, and now businesses — and workers — are in a wait-and-see mode. Perhaps someone should advise ADP to wait and see, too.