March Payrolls Crumble: Only 98K Jobs Added Despite Slide In Unemployment Rate

And so the reflation trade is dead once again.

So much for that blockbuster ADP report. As we cautioned previously in our payrolls preview, the big risk to today's payrolls report was to the downside, mostly as a result of the unseasonably cold March weather, and moments ago the BLS confirmed that indeed something snapped in March when only 98K jobs were added, roughly half of the 180K expected. This was the lowest monthly jobs number since May of 2016.

Worse, both prior months were revised lower. The change in total nonfarm payroll employment for January was revised down from +238,000 to +216,000, and the  change for February was revised down from +235,000 to +219,000. With these revisions, employment gains in January  and February combined were 38,000 less than previously reported.

What is surprising is that the poor Establishment Survey number was on the back of a very strong Household Survey, which saw employment rise by 472,000 to 153 million, while the number of unemployed Americans reportedly declined by 326K to a seasonally adjusted 7,202K.

Also confusing, the unemployment rate tumbled to 4.5% vs prior 4.7%; and below the 4.7%, estimate, in a range 4.6%-4.8% from 82 economists surveyed. The underemployment rate 8.9% vs prior 9.2%

There were no changes to the participation rate, which remained at 63% with the number of people not in the labor force barely changed at 94,213 million.

That other closely watched indicator, average hourly earnings, rose in line with expectations at 0.2% m/m, while the annual increased also matched expectations of Y/y 2.7%, dipping modestly from last month's 2.8%.

Some other details:

  • Nonfarm private payrolls rose 89k vs prior 221k; est. 170k, range 125k-270k from 42 economists surveyed
  • Manufacturing payrolls rose 11k after rising 26k in the prior month; economists estimated 17k, range -5k to 32k from 22 economists surveyed

And from the report:

Total nonfarm payroll employment edged up by 98,000 in March, following gains of 219,000 in February and 216,000  in January. Over the month, employment growth occurred in professional and business services (+56,000) and in  mining (+11,000), while retail trade lost jobs (-30,000).

In March, employment in professional and business services rose by 56,000, about in line with the average monthly  gain over the prior 12 months. Over the month, job gains occurred in services to buildings and dwellings (+17,000) and in architectural and engineering services (+7,000).

Mining added 11,000 jobs in March, with most of the gain occurring in support activities for mining (+9,000). Mining employment has risen by 35,000 since reaching a recent low in October 2016.

In March, employment continued to trend up in health care (+14,000), with job gains in hospitals (+9,000) and outpatient care centers (+6,000). In the first 3 months of this year, health care added an average of 20,000 jobs per month, compared with an average monthly gain of 32,000 in 2016.

Employment in financial activities continued to trend up in March (+9,000) and has increased by 178,000 over the past 12 months.

Construction employment changed little in March (+6,000), following a gain of 59,000 in February. Employment in construction has been trending up since late last summer, largely among specialty trade contractors and in residential building.

Retail trade lost 30,000 jobs in March. Employment in general merchandise stores declined by 35,000 in March and has declined by 89,000 since a recent high in October 2016.

Employment in other major industries, including manufacturing, wholesale trade, transportation and warehousing, information, leisure and hospitality, and government, showed little or no change over the month.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.3 hours in March. In manufacturing, the workweek edged down by 0.2 hour to 40.6 hours, and overtime edged down by 0.1 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.5 hours.

In March, average hourly earnings for all employees on private nonfarm payrolls increased by 5 cents to $26.14, following a 7-cent increase in February. Over the year, average hourly earnings have risen by 68 cents, or 2.7 percent. In March, average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $21.90.