Whether the March payroll disappointment is merely a payback for the weather-induced strength in job growth over the last three months or a reflection of the fragile recovery will be clarified by job data over the next few months.
- John Praveen, chief investment strategist, Prudential
April 10, 2012
- The U.S. labor market disappointed in March with payroll growth slowing to just 120,000 jobs after three months of over 200,000 jobs. The unemployment rate inched lower to 8.2%, the lowest since January 2009.
- The softer payroll reading in March could possibly be a payback for “weather effect” with the unusually warm winter resulting in strong job growth in January and February. Jobs data over the next few months is likely to clarify whether the weather-related boost to payrolls in the last three months was more-or-less fully reversed in March.
-U.S. non-farm payrolls increased by 120,000 in March (market expectation of 203,000) after 240,000 jobs were created in February (revised up from 227,000) and 275,000 in January (revised down from 284,000). On balance, payrolls for the last two months were revised up by 4,000.
- Most of the slowdown in March payroll growth came from the private services-producing industries. Private-services producing industries added 90,000 jobs in March, a sharp slowdown from 204,000 in February and 199,000 in January. The slowdown was relatively broad-based.
- The unemployment rate eased to 8.2% in March from 8.3%. The broader U-6 unemployment rate eased even further to 14.5% from 14.9%. This stronger decline was largely due to a reduction in those working part-time for economic reasons. Household employment fell -31,000 after growing 428,000 in February. However, household unemployment fell an even stronger -133,000 after edging up 48,000 in February.
- After strong job growth over the last three months, U.S. payrolls disappointed in March. Whether the March payroll disappointment is merely a payback for the weather-induced strength in job growth over the last three months or a reflection of the fragile recovery will be clarified by job data over the next few months.
- Further if labor market data over the next few months lends support to Fed Chairman Bernanke’s caution on recent improvements in the U.S. labor market, it is likely to revive prospects for additional easing measures like QE3.