U.S. Employment Growth Slows While Jobless Rate Slips in March; Earnings Edge Higher

Nonfarm payrolls increased 236,000 in March (2.7% y/y) after rising 326,000 in February and 472,000 in January, revised from 311,000 and 504,000, respectively. Expectations had been for a 240,000 rise in the Action Economics Forecast Survey.

Average hourly earnings gained 0.3% last month following an unrevised 0.2% February increase and a 0.3% January rise, after three consecutive 0.4% gains in late 2022. A 0.3% March rise had been expected. The y/y earnings increase weakened to 4.2%, down from a high of 5.9% y/y in March 2022.

The unemployment rate, measured in the household survey, eased to 3.5% in March from 3.6% in February. Expectations had been for 3.6%. Household employment rose 577,000 after rising 177,000 in February. The labor force rose 480,000 following a 419,00 increase. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons, slipped to 6.7% and has been trending sideways for six months.

In the establishment survey, private-sector employment rose 189,000 in March (2.8% y/y) after a 266,000 February increase. Factory sector jobs eased 1,000 (+2.1% y/y) for a second consecutive month. Construction sector employment fell 9,000 (+2.6% y/y) after rising 12,000 in February.

Private service-producing sector employment increased 196,000 in March (2.9% y/y) after improving 255,000 in February. Increases varied greatly amongst service sector categories. Leisure & hospitality employment rose 72,000 (6.5% y/y). Education & health care jobs rose 65,000 (4.3% y/y). Professional & business services employment rose 39,000 (2.1% y/y) including a 10,700 decline (-4.7 y/y) in temporary help employment. Information sector hiring rose 6,000 (2.1% y/y). Trade, transportation & utilities hiring improved 4,000 (1.0% y/y) but financial employment fell 1,000 (+1.0% y/y) for the third consecutive month.

Government sector payrolls rose 47,000 last month (2.3% y/y) after increasing 60,000 in February. Local government jobs increased 26,000 (2.4% y/y). State government employment improved 13,000 (2.4% y/y) and federal government payrolls rose 8,000 (1.3% y/y) in March.

Private-sector average hourly earnings rose 0.3% (4.2% y/y) in March. Earnings in the goods-producing sector improved 0.5% (4.6% y/y). Earnings in construction rose 0.4% (5.4% y/y), while factory sector earnings strengthened 0.5% (3.9% y/y). In the private services sector, earnings rose 0.2% for the third straight month. The y/y increase of 4.2% is greatly reduced from 6.1% in March 2022. Trade, transportation & utilities sector pay increased 0.1% (4.2% y/y) last month. The 0.8% rise (6.1% y/y) in leisure & hospitality earnings left the y/y gain below the 14.0% December 2021 peak. Professional & business sector earnings increased 0.5% (4.4% y/y). Information sector pay held steady (5.5% y/y) in March and financial activities earnings rose 0.3% (3.9% y/y).

The length of the average workweek slipped to 34.4 hours in March from 34.5 hours in February. That was down from 35.0 hours in January 2021. The workweek in the goods-producing sector fell to 39.9 hours from 40.0 hours. The construction sector average workweek eased to 38.9 hours from 39.0 hours while the factory sector workweek held steady at 40.3 hours. The average workweek in the private service sector slipped to 33.3 hours from 33.4 hours and remained below the 34.0 hour high in early 2021. Professional & business service hours fell from 36.5 hours to 36.3 hours but leisure & hospitality hours decreased from 25.6 hours to 25.3 hours, a roughly two-year low.

The aggregate weekly hours index, a key indicator of production and income, eased 0.1% (+2.0% y/y) in March for a second consecutive month.

The household survey indicated a slip in the jobless rate to 3.5% in March as the labor force participation rate edged up to 62.6% last month from 62.5% in February. It remained below the high of 63.3% early in 2020. The rate for teenagers eased to 37.4%. For workers aged 20-24, the rate held steady at 72.0% in March, up from 70.7% six months earlier. For workers aged 25-54, the rate held steady at 83.1% and matched the high in January 2020. For individuals 55 and over, the rate rose to 38.6% in March.

The employment/population ratio for all workers in March rose to 60.4% from 60.2% in February. It remained below its reading of 61.1% in February 2020 just prior to the pandemic.

The average duration of unemployment rose in March to 19.5 weeks from 19.3 weeks in the prior month, but it remained below a 32.0 week high in June of 2021. The median duration of unemployment declined to 8.1 weeks from 8.3 weeks and remained below its 19.9 week high in June 2021. The ranks of those individuals unemployed for 27 weeks or more rose 4.4% but remained down 22.7% y/y.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's USECON database. Detailed figures are in the EMPL and LABOR databases. The expectations figures are in the AS1REPNA database.