The March jobs report fell far short of expectations, adding only 98,000 to non farm payrolls this month. Economists were predicting around 180,000 jobs on average. Although at first glance this may indicate a weak economy, the jobs report wasn’t all disappointing.
A drop in the unemployment rate and jobless rate were the highlights of the March jobs report. The unemployment rate dropped from 4.7% to 4.5% in the past month while the jobless rate hit its lowest point in over a decade. These two factors suggest that the labor market is indeed tightening and will grow at a steadier pace. Wage gains slowed in March to a 2.7% year over year pace.
Economists are now predicting that the March jobs report is the first step in returning the economy back to normal. Stephen Stanley, Chief Economist at Amherst Pierpont Securities states, “Even if payrolls are slowing down, I’m not sure that that means the labor market is weakening. To the extent that it is slowing down or going to slow down, it’s probably more a function of tight supply than weakening demand.”
Revisions to the February and January jobs report show less jobs added to the economy than originally reported. February lost 16,000 jobs and January 22,000, combining to a net loss of 38,000 in total. Over the past three months, job gains have averaged 178,000 per month.
Employment in the financial activities sector continued its upwards trend, adding 9,000 jobs to the payroll in March. The sector is responsible for adding 178,000 jobs in the last twelve months alone.