Far from the snoozer that many observers expected, the March jobs report featured a number of surprises. Like the February report, this one deflated the main narrative to emerge from its predecessor – in this case, that job growth was accelerating, rather than that wage growth had been accelerating. The most important takeaways from this report are that job growth still has not deviated from its long-standing trend of 200k-ish net job gains a month and that while wage growth hasn’t taken off, its precursors might be.
The March report confirms that it was premature to claim that February represented a true acceleration from recent trends. Job growth remains around +200k (back where it was in January), well above the rate needed to keep pace with labor force growth and push the unemployment rate lower. Standard economic models predict job growth to moderate at this stage of the economic cycle, but getting fiscal stimulus at this stage is not standard, so it remains to be seen whether job growth will accelerate in the way GDP is expected to.
Unlike in the household survey, there were signs of weather impacts on the establishment survey. Construction and retail saw outright declines; within construction, specialty trade contractors remained a larger swing factor than building construction. Specialty trade does plumbing and electrical, but also site preparation.
Among the other major industry groupings, the vast majority saw mere slowdowns, rather than outright declines. The most notable slowdowns occurred in financial activities (2k vs. 30k), leisure/hospitality (5k vs. 23k), and professional/business services (33k vs. 55k). Within that last category, temporary services took a big hit (-600 vs. +21k), which was one of the more worrisome points in this portion of the report. Overall, the breadth of job gains scored a robust 62.6 diffusion index, down from the off-trend 71.1 in February but above the 57.2 in January, when the headline payroll number was significantly higher.
There were no fireworks in average hourly earnings, but several items in the household survey provided grounds for optimism on this front:
As iCIMS’ former chief economist, Josh Wright led a team of data scientists in analyzing emerging trends in the U.S. labor market. With publications ranging from academic journals to national media, Wright previously served as a U.S. economist with Bloomberg L.P., and was a staff researcher at the Federal Reserve.