WASHINGTON (MaceNews) – The U.S. March jobs report Friday surprised on the upside, exceeding expectations with 196,000 additional payroll slots and holding at an unemployment rate of 3.8% but wages undershot, rising just 3.2% over the year.
The sharp rebound from February’s revised 33,000 payrolls total reinforced the scenario that the Federal Reserve’s patient forebearance on rate changes is well advised although it somewhat diminished the probability that the next move, late this year or early next year, could be a rate cut. Still futures markets maintained their expectation for rate cuts after the report was published.
Health care showed healthy acceleration, up 49,000 for the month, along with professional and technical services – key to an expanding economy – which rose 34,000. Restaurants were up 22,000 and construction was less strong for a spring month, up only 16,000.
Manufacturing, however, went negative, losing 6,000 jobs. In February the category had gone up only 1,000. Hiring elsewhere such as in retail, government, financial services and other categories was essentially stagnant.
The report showed that those on the periphery of the labor market seemed to some small extent to be gravitating back toward employment, against the tide of the overarching trend of baby boomer retirements. Labor participation, at a rate of 63.0% in March, first topped that 63% threshold in December and has remained in that neighborhood since, hitting 63.2% in January and February, the highest since March 2014.
The 3.2% annual increase in March average hourly earnings reassured those who worry about labor income’s often presumed upward influence on the inflation rate. But it added to the worries for those who see wage growth continuing to be subpar compared to previous recoveries. Some had forecast wage growth as high as 3.7% for the month.
In the wake of the jobs report both President Trump, on the tarmac before leaving for a southern border event, and his National Economic Council chief Larry Kudlow kept up the call for Fed rate cuts. Kudlow said his remarks were in the context of respect for the Fed’s independence.
The jobs report cut Treasury 10-year yields to 2.493% from above 2.545%. But the 3-month to 10-year yield curve did not reinvert, having turned around to a positive curve at the beginning of the week. The three-month bill yield was at 2.440% following Friday’s jobs report.