US employment report, back on track – IIC Research
By: Ansar Anis Bhesania,
Ismail Iqbal Commodities (Pvt.) Ltd.
The March employment report exuded a solid, if unspectacular, tone, suggesting that the impact of negative weather effects over the winter had largely unwound and that the labour market was again displaying gradual improvement across most of its constituent parts.
In the establishment survey, total payrolls were up 192k, against the consensus (200k) but, given net revisions to the prior two months of 37k, not notably so. Private services led the expansion, adding 167k. A rebound in retail jobs (up 21k, following two months of declines) was suggestive of the unwinding of prior weather effects. The manufacturing sector was one notable weak spot, however, with a 1k decline, the first negative print since July last year. The average workweek rose two‐tenths, to 34.5 hours, back to its level in November and again suggesting that weakness in December to February was largely weather related. Average hourly earnings took the opposite route, up strongly in February (0.4% m/m) but soft in March (0.0%). The trend around 0.2% is consistent with our view that wage growth will gradually pick up this year.
The household survey was equally solid. The employment measure rebounded sharply (up 476k, following a soft 42k in February), although an increase in the labor force participation rate (by two‐tenths, to 63.2%) meant that this did not translate into a decline in the unemployment rate, which moved sideways at 6.7% (6.712% unrounded).
Q1 saw average job growth of 178k (compared with 198k in Q4) and annualized growth in aggregate hours worked of 1.6% q/q (compared with 1.5% in Q4). Summing up the tone of the March report – neither alarmingly weak nor rousingly strong.