Just out from Jan Hatzius
1. Nonfarm payroll employment rose by 216k in March, more than generally expected. Growth over the past two months was revised up by 7k. The modest acceleration in employment came from faster growth in business services and fewer losses of state and local government jobs. We did not see much impact from better March weather: construction employment growth slipped to -1k from +37k previously, and leisure and hospitality employment growth decelerated (to +37k from +48k).
2. In the household survey, employment gained 291k, helping drive the unemployment rate down another tenth to 8.8% (8.828% unrounded). The labor force participation rate was unchanged at 64.2%, implying that the drop in the unemployment was due to job growth rather than departures from the labor force. Broader measures of unemployment also declined, with the U-6 measure reaching 15.7% (from 15.9% in February). The employment-to-population ratio rose to 58.5% from 58.4%.
3. There were a few modest weak spots in the report. First, average hourly earnings were unchanged for a second month. Second, the average work week failed to increase. Although this was expected by the consensus, worker hours remain below pre-recession levels and should be gradually rising over time. Third, the average duration of unemployment rose to a new high of 39.0 weeks (note that a methodological change at the start of this year lifted the mean duration of unemployment). Fourth, diffusion indexes reflecting the proportion of sectors with rising employment were generally soft.
4. Overall a healthy payroll report, but not a very large surprise relative to consensus expectations. In our view, the latest job readings will not have an immediate affect on the monetary policy outlook.