Job Growth Gets Slaughtered in March

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The U.S. Department of Labor released its March payroll and unemployment data Friday morning, and it is hard to imagine how it could have been much worse. The Labor Department reported nonfarm payrolls grew by 126,000 jobs in March, far below a consensus estimate of 247,000 new jobs. Even worse, February’s nonfarm payroll total was cut from a gain of 295,000 to 264,000, and January’s total was sliced from 239,000 to 201,000.

The February unemployment rate of 5.5% was unchanged, as expected.

If there is any good news in this report, it is that wage growth was slightly better than expected. The consensus estimate from Bloomberg called for a 0.2% gain in average hourly earnings. The Labor Department reported a gain of 0.28%, or seven cents an hour to a new rate of $24.86. That is a gain of 2.1% compared with March of 2014.

Monthly job gains over the past 12 months averaged 269,000 per month. Job growth in professional and business services rose by 40,000 in March and has averaged 34,000 a month in the first quarter of 2015. That is well below the 2014 average of 59,000 a month.

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Another big hit came in the mining sector, which includes oil field workers. Mining jobs fell by 11,000 in March and are down by a total of 30,000 so far in 2015. In the first three months of last year, the mining sector added 41,000 jobs.

Health care added 22,000 jobs in March and has added 363,000 jobs since March of 2014. Another large gain came in food and beverage jobs (waiters, bartenders and so on), up 9,000 in March after rising 66,000 in February. The average monthly gain in the first quarter was 33,000, identical with the average in the first quarter of 2014.

The labor force participation rate came in at 62.7%, within a narrow 12-month range of 62.7% to 62.9%. Workers in part-time jobs who would have preferred full-time jobs totaled 6.7 million, essentially identical with the February report.

The number of long-term unemployed also was essentially unchanged at 2.6 million in March, and it accounted for nearly 30% of the unemployed total.

The wage increases recently announced by large employers like Wal-Mart Stores Inc. (NYSE: WMT) and McDonald’s Corp. (NYSE: MCD) should begin to be felt in hourly earnings later this year, but the immediate question is whether the March report is due to a number of one-time factors or is the beginning of a slowdown in U.S. economic growth.

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