Good Friday on this Good Friday, Happy Easter and Happy Passover,
Jobs report day.
Well, the fourth jobs report day of the week and by far, the most important. The data from the previous three days all pointed to a quickly slowing employment picture. Today’s data continued to show closing but not as rapidly as the last few days. I am including a great recap from the WSJ as it sums up the picture pretty well and have highlighted some quick hit notes. Equity markets are closed today and the bond market closed about 30 min ago with some very light and lackluster trading which caused a minor sell off as the news wasn’t bad enough. We will see what the real sentiment is when trading is back to normal next week.
U.S. payrolls grew by 236,000 in March and the jobless rate fell to 3.5%. Austen Hufford and Greg Ip here to take you through the Labor Department’s latest report on the economy.
March Jobs Report Shows Hiring Gradually Cooling
Bad News for Workers is Good News for the Economy
Hourly wages rose just 0.3% in March from February, and were up 4.2% from a year earlier, the lowest since June, 2021. This isn’t comforting to workers since they are falling behind inflation, but it’s good news for the Fed in its efforts to slow inflation without causing a recession. That’s not because wages are driving up prices; more likely they are responding to inflation. Still, wages don’t suffer from the idiosyncrasies that distort various price indexes and thus are a pretty clean read of underlying inflation pressure. Adjusted for productivity, 4.2% wage growth is a bit too high to be compatible with the Fed’s 2% inflation target in the long run. Still, in the last three months wages are up just 3.2% at an annual rate, which is compatible with 2% inflation. This increases the odds inflation can return to close to 2% without the Fed having to push unemployment up sharply – the hoped-for soft landing. Blue collar workers continue to do better than white, with production and non-supervisory earnings still up 5.1% from a year earlier. —Greg Ip
Rising Labor Supply Meets Cooling Demand
Non-farm payrolls rose 236,000 in March from February. Though the slowest since pandemic lockdowns ended in mid-2020, that’s robust by any normal standard, more than double the long-run sustainable pace. Two forces are at work. First is cooling demand. Employers have filled many of the gaps that bedeviled them in the first two years of the pandemic, as demonstrated by high-but-falling vacancies, and some, especially in construction and information, are hunkering down as sales weaken. The second force is rising supply. The labor force participation rate rose to 62.6% in March from 62.5% in February. It’s almost back to its prepandemic level, though for technical reasons the two periods aren’t strictly comparable. Participation by young adults (20 to 24 years old) has jumped sharply since November, to 72% from 70.6%. The combination of rising supply and cooling demand explains why job growth can remain robust yet wage growth has cooled, despite unemployment slipping to 3.5%, near a half-century low. —Greg Ip
The Winners of the First Three Months of 2023
Some industries have posted big job gains so far this year while others are posting losses. So far in 2023 the biggest gainers are government jobs, restaurants and hotels and health care and social assistance workers. The information sector, which includes many tech jobs, as well as utilities and the finance and insurance sector employed fewer workers this year.
Please remain safe and stay healthy, enjoy the holiday weekend, and first, make today great!