U.S. March Employment: What You Need to Know

April 5, 2013 03:52 AM

Via a special arrangement with Informa Economics, Inc.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

Data on nonfarm payrolls disappoints at an 88,000 rise; unemployment down to 7.6%.

The numbers: Nonfarm payrolls rose 88,000 in March, the smallest since June 2012.

Expectations: 190,000 increase in nonfarm payrolls.

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Retail was the big decliner with 24,000 jobs lost in March, a surprising shift since the sector had added an average of 32,000 per month over the past six months. Over the prior 12 months, employment growth had averaged 169,000 per month. Job growth in health care continued in March, with a gain of 23,000, similar to the prior 12-month average.

Private sector jobs growth was 95,000 for the month with the government shedding 7,000 jobs.

Unemployment rate: Ticked down to 7.6% in March.

Expectations: Unchanged at 7.7%

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Some 469,000 fell out of the workforce in March, key factor in the lower unemployment rate even though the level is the lowest since December 2008.

Other highlights:

The participation rate in the workforce participation rate edged down to 63.3 percent, from 63.5 percent and is the lowest since May of 1979.

Average earnings rose one cent to $23.82 an hour. Over the year, average hourly earnings have risen by 42 cents, or 1.8 percent.

The average workweek increased 0.1 hour to 34.6 hours.

U-6, the broadest measure of unemployment, fell sharply to 13.8 percent in March from 14.3 percent in February.

Revisions: February now stands at 268,000 jobs added (originally 236,000) while January jobs added are at 148,000 (originally 119,000).

Comments: This is clearly a disappointing set of numbers for markets to digest this morning. The data raises the prospect that the U.S. could be staring at its fourth consecutive spring swoon - a strong start to the year in the economy replaced by disappointing results as spring arrives.

The downturn in the participation is a key factor. Folks are dropping out of the labor market and that is a sign the U.S. economy remains in a stagnant situation.

This raises questions about the Fed's setting of their numerical "target" for the unemployment rate relative to when they would begin to temper stimulus efforts, their bond buying in particular. Given the continuing downtick in the unemployment rate while the overall jobs picture remains clearly less than healthy, this will no doubt up the talk by Fed officials that they will consider many factors when it comes time to start scaling back their efforts, not just rely on a number to dictate action. But it also underscores the peril of putting that numerical target out there.

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