The headline numbers of 121,000 in March and 240,000 in February were well below the consensus expectations, which ran about 205,000. Private payrolls increased by 121,000, with the bulk coming from private services at 90,000.
Gains were strongest in business services (31,000), education and health (37,000), and leisure and hospitality (39,000), but gains in these sectors were below what had been observed in recent months. On the goods-producing side of the ledger, construction payrolls fell by 7,000.
Manufacturing payrolls, however, grew by 31,000 and, along with gains in leisure and hospitality, suggest that some underlying labor market strength in cyclical sectors remains in place.
The public sector shed 1,000 jobs, and recent trends there suggest that the persistent declines in public sector payrolls have subsided. The three-month average change in public sector payrolls is now 1,000, versus the -22,000 average monthly change recorded in 2011. Finally, net revisions to previous months added 4,000 jobs, continuing the pattern of upward revisions to the data, but at a slower rate.
EARNINGS GROWTH STAGNANT
Average hourly earnings rose 0.2 percent, compared with an upwardly revised 0.3 percent in the previous month (initial estimate: 0.1 percent), and the y/y change now stands at 2.1 percent. The average workweek was unchanged at 34.5 hours, in line with expectations, while the February data were revised higher to 34.6 from 34.5. Aggregate hours worked increased at a 3.7 percent 3m/3m (saar) pace in March, compared with 4.1 percent in February and 3.4 percent in January. The payroll proxy for labor income (aggregate hours worked times average hourly earnings) rose at a 5.6 percent 3m/3m (saar) pace after rising 5.8 percent last month and 5.0 percent in January.
The household survey also took on a weak tone, with employment falling by 31,000. This is well below the three-month average of 415,000 and breaks eight consecutive months of household employment gains.
THE CLAIMS DROP BECAUSE CLAIMANTS DROP OFF
The unemployment rate fell to 8.2 percent (8.192 percent unrounded), reflecting a drop in the participation rate of one-tenth, to 63.8 percent. Overall, the report had an undeniably weak tone and will raise doubts about the strength of the labor market. Given that the report reflects only one month of data and some of the underlying cyclical sectors registered payroll gains, I do not view it as conclusively signaling a shift to a lower trend rate of employment growth.
THE BOTTOM LINE OF THE BOTTOM LINE
Although the unemployment rate went down to 8.2 percent, the number of jobs created was only 121,000. This is basically in line with population growth. The only reason the number of unemployment claims went down is because the overall labor force participation went down — those hundreds of thousands who are no longer eligible for unemployment. This is what happens when you give people less incentive.
The president says we have tried ‘on-your-own economics’ but now we can see how ‘government-run, high-tax, heavily-regulated, bureaucrats-pick-the-winners-and-losers
economics’ destroys job growth.
The 121,000 new jobs are in line with what you would expect with GDP growth and income growth. As I have always said the prior job growth was not in line with the low GDP and income growth we were seeing. Our low GDP and income growth during this period should have given us job growth of 120,000-150,000 a month, rather than the anemic growth we had in February and March. What this says to me is the growth in jobs is a just bounce from too many layoffs during the recession beyond what the GDP at that point was indicating. The effect of the administration’s policies are finally showing.
One month is not a trend, but we finally have a correlation between the GDP and Income growth. And on the bright side, we have job growth in the service industry that serves alcohol.
THE FLORIDA EXCEPTION
One state that stood apart from national trends was Florida. What they saw there was amazing, and it was the result of a government approach to economics that was 180 degrees from what the White House wants.
With the release of March’s data, Florida has now had 11 consecutive months of job growth. Their unemployment is at a three-year low. These job growth trends are a result of Florida’s reducing regulation, easing the tax burden on small businesses and delivering two consecutive balanced state budgets without tax increases.
This is the example we need in every state, and most especially in Washington, D.C. The parties must come together to create a positive business environment, with established and common sense rules, a reduction in bureaucratic induced burdens, and the removal of uncertainty and ambiguity that comes from arbitrary and radical policies.
David Park is Managing Partner at Austin Capital, LLC, a merchant bank that assists small companies with financial consulting, and is also Chairman of the Job Creators Alliance, a nonprofit comprised of current and former major business leaders who are committed to the defense and preservation of the free enterprise system.