• 103,000 were created in March following a very large increase of 326,000 in February.
• Adjustments for seasonal variation and bad weather may explain the low jobs number.
• The uenmployment rate (U-3) has held at 4.1% for 6 consecutive months, the lowest since 2000.

The Bureau of Labor Statistics (BLS) reports that 103,000 jobs were added in March, of which 102,000 were private sector jobs. The largest gains were in professional and business services (+33,000), education and health services (+25,000), and manufacturing (+22,000). Job losses were recorded in construction (-15,000), retail trade (-4,400), and other services (-1,000) industries. The government sector added 1,000 jobs.

The overall labor force participation rate (LFPR) ticked down from 63.0% to 62.9%. The employment-to-population ratio was unchanged at 60.4%. Although the prime working-age (25 to 54) LFPR ticked down to 82.1% this March, that was after it had surged from 81.8% to 82.2% last month. Overall, it remains short of its 83% average from the previous business cycle’s expansion.^[1]

The headline unemployment rate (U-3), which counts as unemployed those who searched for work in the last four weeks, has held at 4.1% for six consecutive months, the lowest since 2000.^[2]  The “real” unemployment rate (U-6) fell from 8.2% to 8.0%. This includes those in U-3, those who searched for work in the past twelve months, and those who want full-time work but can only find part-time work.

Average hourly earnings (AHE) and average weekly earnings (AWE) of production and nonsupervisory workers^[3] were 2.4% and 2.7% higher than 12 months ago, respectively.^[4] An AWE growth rate that exceeds the AHE growth rate indicates that people are working more hours per week since last year. AHE and AWE each increased an average of 3% per year, compared with averages of only 2.2% and 2.4% in the current expansion, respectively.

Context

Job creation has averaged 202,000 jobs per month for the year, even with the 103,000 March jobs number. The average of March and February is a gain of 214,000 jobs per month, indicating the economy is continuing in the right direction thanks to regulatory reforms and the recently enacted Tax Cuts and Jobs Act. The 2017 monthly average was 182,000.

Weather and statistical adjustments for seasonal trends may have played a role in the below expectations March jobs number. To better isolate trends in the economy, the BLS removes seasonal variations from its data. However, since the 2008-09 recession, seasonally adjusted job creation data still seems to exhibit seasonal patterns, especially for the first three months of the year. Additionally, a Nor’easter—mostly affecting New England—during the week BLS conducted its surveys may have further reduced the jobs number.

ADP, a private company that manages payrolls and produces widely cited estimates of private job creation, did not register a large drop in job gains. It shows 241,000, 246,000, and 241,000 new jobs for January, February, and March, respectively this year, which suggests that the below-expectations March nonfarm payroll jobs number is not indicative of slower economic growth ahead.

Noteworthy

The jobs number for February was revised up from 313,000 to 326,000 (second estimate) and January’s was revised down from 239,000 to 176,000 (final estimate), for a net loss of 50,000 jobs.

The April Employment Situation release is scheduled for May 4 at 8:30 a.m.

[1] JEC considers the prime working-age LFPR, which measures the ratio of those aged 25 to 54 who are currently employed or have sought work in the past four weeks, a better indicator because demographic factors are affecting the overall LFPR. The dates used to calculate the previous business cycle expansion’s 83% average prime-age LFPR are November 2001 to December 2007.

[2] The U-3 rate is less meaningful than it once was because the labor force participation rate has been low since the last recession.

[3] JEC prefers the production and nonsupervisory workers measure of wages as more representative of the average worker. Production and nonsupervisory workers account for over 82% of all private-sector employees. For service-producing industries, this measure excludes supervisors and employees who are also owners. For the goods-producing sector, workers engaged in management, sales, and accounting are excluded.

[4] These measurements consist only of gross wages and salary and do not account for non-monetary benefits and compensation. They are not adjusted for inflation. AWE accounts for the average number of hours worked while AHE does not.