March Payrolls and Unemployment Act as a Goldilocks Report for the Economy

It looks like the fears about the jobs market might have been misguided. All the warning signs were signaling that the jobs market strength was waning, but the Bureau of Labor Statistics (BLS) now reports that nonfarm payrolls rose by 196,000 in March and that the unemployment rate remained flat at 3.8%.

What matters here is that the payrolls gains were above consensus estimates from both Dow Jones and from Econoday. The dismal 20,000 nonfarm gain from February also was revised slightly higher to a reading of 33,000.

In many ways, this could be considered a Goldilocks employment report for investors.

While the report showed that average hourly wages rose by just 0.14% from in February, March’s average pay rose by 3.2% on a year-over-year basis (still under the 3.4% seen the prior month, and below expectations of the 3.4% pace from last month).

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The BLS data indicates that there were about 201,000 fewer people counted as employed in March, but the labor force also was shown to have contracted by 224,000 people. Those who were counted as not being in the labor force increased by 369,000, up to 95.6 million people.

The closely watched labor force participation rate ticked lower to 63%, a 0.2 point drop from the prior month and the lowest reading since last November.

According to the BLS data, the number of unemployed persons was roughly 6.2 million and the number of long-term unemployed (those who have been jobless for 27 weeks or more) was 1.3 million and accounted for 21.1% of the unemployed. Those persons employed part time for economic reasons, the involuntary part-time workers who would have preferred full-time work, was 4.5 million in March.

Several sectors led the way in March’s job growth. Health care added 49,000 jobs for a gain of 398,000 over the past 12 months. Employment in professional and technical services grew by 34,000 in March, for a gain of 311,000 over the past 12 months. Employment in food services and drinking places continued its upward trend with a gain of 27,000 in March.

Employment was little changed in construction (up 16,000), and manufacturing was shown to have lost 6,000 payrolls in March. Other major industries such as mining, wholesale trade, retail trade, transportation and warehousing, information, financial activities, and government were reported as showing little change over the month.

As far as the Goldilocks scenario for investors, the March payrolls gains and the slight upwardly revised February jobs numbers were strong enough to support better growth without tipping the Federal Reserve’s hand in either direction. The report should allow growth to continue but without any fear or stronger wording by Fed Chief Powell and fellow Fed members.

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