This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.
U.S. employers added 196,000 jobs and the unemployment rate held steady at 3.8% in March, a spring bump that’s welcome news for workers, investors and the Fed. Jeff Sparshott and Greg Ip here to take you through some of the numbers and what they say about the broader economy.
SLOWDOWN? WHAT SLOWDOWN?
Three months ago, markets were concerned the Federal Reserve may have tipped the U.S. into recession. This morning’s jobs report suggests the panic was for naught. March payroll growth bounced back to a healthy 196,000 from a shutdown- and weather-distorted 33,000 in February. For the first quarter, jobs grew at 1.7% annual rate, the same as in the fourth. Unemployment ended the quarter at 3.8%, down slightly from December. Private hours worked is a better guide to underlying strength, and they grew 1.8% annualized in the quarter, the fastest in a year. If there’s a somber note, it’s the supply side: Productivity growth appears to have ground to a halt and labor-force participation has stopped rising. —Greg Ip
KEY THEMES
GOOD ENOUGH
The strong March employment report should allow Fed officials to breathe a sigh of relief: It shows weak payroll growth in February was an aberration and not the start of a more serious economic slowdown. Evidence of solid job growth and low unemployment should bolster their decision last month to hold interest rates steady for a while. In other words, the report should be “good enough” to keep on the sidelines for now—neither cutting nor raising rates, Nick Timiraos writes.
WAGE GROWTH SLOWS
One more reassuring sign for the Fed: Wages aren’t raging in a way that’s likely to push broader inflation out of control. Average hourly earnings for private-sector workers were up 3.2% from a year earlier. That’s a cooldown from 3.4% in February and suggests inflation pressures aren’t building. The silver lining for workers: Inflation is mild, which should help boost real disposable incomes.
THE STREAK LIVES
The U.S. economy has cranked out jobs for 102 consecutive months, the longest stretch on record. Yes, February looked bleak but it takes more than one month to make a trend. Over the past three months, job creation has averaged 180,000 a month, a sign economic growth is cooling as expected, but not so much one of impending doom.
THE STREAK DIES
One blemish on the March report: The factory sector shed jobs for the first time since mid-2017. Until last month, manufacturers had enjoyed their longest job creation streak since the 1990s.
COMING AND GOING
The labor-force participation rate ticked down in March. In February, it had matched its highest level since September 2013, defying broader demographic trends (mostly retiring baby boomers). Société Générale’s Omair Sharif says the recent rise has been driven by far fewer people exiting the workforce each month, rather than a sharp rise in new entries. “It’s a fool’s game to predict entries and exits on a monthly basis, but we wouldn’t be surprised to see the participation rate take a bit of a breather around its current reading.”
WINNERS AND LOSERS
The service sector—outside of retail—posted the strongest job gains last month. Joel Naroff of Naroff Economic Advisors had this take: “As for March, there were really only two strong sectors, health care and restaurants.”
TWEET OF THE DAY
[wsj-responsive-sandbox id = "0" ]from Real Time Economics https://on.wsj.com/2UDeABM
No comments:
Post a Comment