Has the US jobs growth machine misfired?
The March employment report from the Bureau of Labor and Statistics disappointed most analysts.
The reason: Non-farm payroll growth hit 126,000, well below the expected 245,000 gain.
Broken String
Furthermore, this number was the lowest in 15 months and broke a string of 12 straight months of job growth exceeding 200,000.
Adding to the lackluster report was 69,000 in downward revisions to jobs created the previous two months.
Among categories, professional and business services was up 40,000, education and healthcare advanced 38,000 and retail gained 26,000.
Energy Jobs
However, jobs declined in mining (which includes energy jobs), logging and both construction and manufacturing. It is unclear if weather affected job conditions during the month.
The other important number, the unemployment rate, was unchanged at 5.5%.
Helping this number, if you can call it that, were the 96,000 Americans who left the labor force.
Labor Participation
This also resulted in a labor force participation rate of 62.7% that matches a 37 year low.
Just how the U.S. Federal Reserve interprets this pause in robust jobs growth is key.
The next two monthly employment reports will be important in verifying the nature of March conditions or proving it was an anomaly.
Rate Hikes
The Fed clearly has a desire to move short-term rates above today’s minimal level.
However, in my view, it will have a tough time moving quickly if job growth is truly slow and inflation indicators maintain recent low levels.
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