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U.S. Jobs Report: What to Watch For Job Growth Loses Steam as U.S. Adds 98,000 in March
(about 4 hours later)
At 8:30 a.m. Eastern time Friday, the Labor Department will report the latest figures on hiring and unemployment in March. Fairly or not, the data will be a measure of President Trump’s success in terms of job creation in the early days of his administration. Job growth turned in a disappointing showing in March, according to data released Friday by the Labor Department. It is the latest official snapshot of the state of the American economy.
Wall Street is predicting that the economy gained 180,000 jobs last month. That suggests economists believe that hiring slowed down from its robust pace in February, when the economy also recorded healthy wage growth. • 98,000 jobs were added last month. Economists had been anticipating a gain of about 180,000.
Unemployment is expected to remain unchanged at 4.7 percent. • The unemployment rate was 4.5 percent, the lowest level in almost a decade, down from 4.7 percent in February.
Here are some key factors to watch: • The average hourly wage grew by 0.2 percent.
The January and February jobs reports were better than expected, with well over 200,000 jobs added in each month. The robust numbers led some analysts to conclude that the economy is benefiting from a “Trump bump,” but hard data to support that has been scarce. Hiring in March was expected to drop after the monthly gains of more than 200,000 in the two previous months, but this was the weakest showing for the economy in nearly a year. Although it represents just one month’s data, it will raise questions about whether improving business sentiment is actually translating into any meaningful action by employers.
Last month, the president and Sean Spicer, the White House press secretary, claimed credit for the job creation, saying it was a result of “the surge in economic confidence and optimism that has been inspired since his election.” On the other hand, at 4.5 percent in March, the unemployment rate is at its lowest point since May 2007, marking a milestone in the long road back from the Great Recession.
If March also turns out to be unexpectedly strong, it would buttress arguments that momentum has in fact picked up in 2017. It would also suggest that so-called soft data — like stronger sentiment among businesses — was actually translating into corporate decision-making. The robust numbers in January and February led some analysts to conclude that the economy was benefiting from a “Trump bump” after President Trump’s election, but hard data to support that argument has been scarce.
After a warm February in many parts of the country, the weather turned much colder in March, with a mid-month blizzard on the East Coast. Some economists think the colder weather could skew the data downward, especially because the week in which the government surveyed households for the monthly report coincided with the storm. In addition, construction jobs could be weak, after a big jump in February. A month ago, Sean Spicer, the White House press secretary, claimed credit for the increased job creation on Mr. Trump’s behalf, saying it was a result of “the surge in economic confidence and optimism that has been inspired since his election.”
At the same time, balmy February weather may have pulled forward hiring in the leisure and hospitality area, reducing job creation at restaurants in March. The latest report will only add to the debate over whether so-called soft data, like stronger sentiment among businesses, is actually prompting companies to hire more workers. March’s data suggests it isn’t, as does the 38,000 downward revision in estimated job creation in February and March.
After weakness last fall, factories have been gaining steam, with manufacturers expected to add 17,000 more jobs in March. “It was a disappointing report with no silver lining in the details,” said Rob Martin, an economist at Barclays. “Service-sector employment weakeness points to a substantial slowdown in activity.”
The sector accounts only for 9 percent of employment, but manufacturing punches above its weight because factory jobs pay considerably more than many service positions. Gains in this sector would also help Mr. Trump with his base, which liked his promises to erect trade barriers and promote blue-collar jobs. The headline number for hiring and the unemployment rate are derived from separate surveys by the Bureau of Labor Statistics, one of establishments, the other of households. Although the two tend to converge over time, they can vary widely from month to month, and March was one of those times.
If the forecast is right, expect the White House to claim credit. But for the moment, improving economies overseas, and the fading effects of the strong dollar, have much more to with the manufacturing sector’s revival than policies in Washington. So while businesses showed an anemic gain of 98,000 jobs in terms of payrolls, households reported a 472,000 increase in employment, without any fall in labor participation. That explains why the unemployment rate could fall by 0.2 percentage point, even as the headline number for job creation fell way short of expectations.
One of the biggest economic stories in recent months has been the shift of shoppers from brick-and-mortar stores to online rivals. Sears, Macy’s and J.C. Penney have announced plans to close hundreds of stores and lay off thousands of workers. Even brands like Ralph Lauren are pulling back. But some economists are wary of putting too much weight on March’s household figures since the week they were gathered by government researchers coincided with a blizzard on the East Coast. That may have skewed the data by basing calculations on fewer households.
Although those cuts will take time to show up in the jobs report, the troubles at traditional retailers are expected to also reduce hiring. After a gain of 40,000 jobs in January, then a loss of 26,000 in February, more losses in the retailing sector would confirm the downward trend. In recent months, blue-collar fields like manufacturing and construction have been very solid, a sharp contrast with late last year when service industries like education, business services and health led the way.
The private sector is thought to have gained jobs last month, but the opposite is true for the public sector. After weakness last fall, factories have been gaining steam, with manufacturers adding another 11,000 jobs in March.
With the White House decision in January to freeze government hiring, along with attrition, experts estimate that federal employment dropped by more than 10,000 in March. Manufacturing accounts for only 9 percent of employment but punches above its weight, because factory jobs pay considerably more than many service positions. Gains in this sector also help Mr. Trump with his base, which liked his promises to erect trade barriers and promote blue-collar jobs.
State and local hiring could offset some of that loss, but federal employment is shifting from a tailwind to a headwind for the overall economy. But for the moment, improving economies overseas, and the fading effects of the strong dollar, have much more to with the manufacturing sector’s revival than policies in Washington.
As some experts feared, the deep retrenchment in the retail sector as consumers shift from brick-and-mortar shopping to online purchases clearly registered in March’s report. Retail lost 29,700 jobs, on top of a 30,000 reduction in February.
With chains like Sears, J.C. Penney and Macy’s set to close hundreds of stores and lay off thousands of workers, retail is expected to create a big drag on overall hiring in the months ahead.
The findings on wages were more encouraging. Although the proportion of Americans in the work force remains near multidecade lows, the fall in the unemployment rate and the steady hiring in recent months are translating into raises for most workers.
Last month, average hourly earnings rose by 0.2 percent, bringing the 12-month increase to 2.7 percent.
The tighter labor market has prompted employers to pay more to attract and retain workers, said Amy Glaser,
“In business reviews, the No. 1 question is whether employers are competitive as workers become more scarce,” Ms. Glaser said. She added that her firm was also seeing more companies hire new employees directly, rather than first having them work in a temporary position, or what she terms “try before you buy.”
“Employers are also converting temp workers to permanent earlier than usual,” Ms. Glaser said. “We’re seeing an uptick across the board.”