U.S. Payroll Growth Improves in March, but Downward Revisions & Higher Jobless Rate Cloud Employment Picture
by:Tom Moeller
|in:Economy in Brief
Summary
- Job strength is concentrated in three sectors.
- Earnings growth trend decelerates.
- Jobless rate is highest in four months.
Nonfarm payrolls increased 228,000 (1.2% y/y) during March after rising 117,000 in February, revised from 151,000, and 111,000 in January, revised from 125,000. Expectations had been for a 130,000 rise in the Action Economics Forecast Survey. The latest figure left the three-month average change at 152,000 in March, down from 232,000 in January.
Average hourly earnings rose an expected 0.3% during March after increasing 0.2% in February, revised from 0.3%, and 0.4% in January. Earnings growth of 3.8% y/y was below the 5.9% high in March 2022.
The unemployment rate, measured in the household survey, edged up to 4.2% last month and added to the February increase to 4.1% from 4.0% in January. The Action Economics Forecast Survey expected 4.1%. It reached a low of 3.5% in July of 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, eased to 7.9% from 8.0% in February.
In the establishment survey, private-sector employment rose 209,000 in March after a 116,000 February increase. Factory sector jobs edged 1,000 higher (-0.6% y/y) after an 8,000 gain. Construction sector employment increased 13,000 (1.8% y/y), after rising 14,000 in February.
Private service-producing sector employment increased 197,000 (1.2% y/y) in March after improving 90,000 in February. Increases varied greatly amongst service sector categories. Education & health sector employment rose 77,000 (3.4% y/y) following a 60,000 February decline. Leisure & hospitality employment rose 43,000 (1.3% y/y) following a 17,000 decline. Trade, transportation & utilities rose 48,000 (1.0% y/y) following a 21,000 increase. Professional & business services employment rose 3,000 (-0.2% y/y) following a 7,000 rise and financial employment improved 9,000 (1.0% y/y) after a 16,000 gain.
Government sector payrolls rose 19,000 (1.3% y/y) last month after increasing 1,000 in February. Local government jobs increased 17,000 (1.3% y/y) following a 16,000 gain. State government employment rose 6,000 (2.1% y/y) following a 4,000 February decline and federal government payrolls fell 4,000 (0.0% y/y) after declining by 11,000.
Private-sector average hourly earnings rose 0.3% (3.8% y/y) in March after increasing 0.2% in February. Earnings in the goods-producing sector improved 0.5% (4.3% y/y) following a 0.4% gain. Earnings in construction rose 0.3% (3.9% y/y), while factory sector earnings rose 0.7% (4.6% y/y). In the private services-sector, earnings rose 0.2% (3.7% y/y) for the second straight month. Trade, transportation & utilities sector pay increased 0.5% (2.8% y/y) last month. Leisure & hospitality earnings gained 0.6% (4.2% y/y). Professional & business sector earnings increased 0.2% (4.8% y/y). Information sector pay increased 0.2% (4.2% y/y) and financial activities earnings rose 0.5% (4.0% y/y) last month.
The length of the average workweek held steady at 34.2 hours in March. The workweek in the goods-producing sector rose to 40.0 hours from 39.7 hours. The construction sector average workweek improved to 39.3 hours while the factory sector workweek edged up to 40.2 hours. The average workweek in the private service sector held at 33.1 hours and remained below the 34.0 hour high in early-2021. Professional & business service hours rose to 36.4 hours but leisure & hospitality hours were marginally higher at 25.5 hours.
The household survey indicated a rise in the jobless rate to 4.2% in March as both employment and the size of the labor force edged higher. The labor force participation rate edged up to 62.5% last month from 62.4% in February. It remained below the high of 63.3% early in 2020. The rate for teenagers improved to 37.6%. For workers aged 20-24, the rate increased to 72.1%, up from 70.7% six months earlier. For workers aged 25-54, the rate fell to 83.3% from a high of 83.9 last August. For individuals 55 and over, the rate improved to 38.2% in March.
The employment/population ratio for all workers in March held at 58.9% and remained below the 60.3% level twelve months earlier. It is still below its peak reading of 61.1% in February, 2020 just prior to the pandemic.
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.
Economic Outlook from Federal Reserve Chair Jerome H. Powell can be found here.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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