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First Cut: March payrolls increase more than expected at up 196,000, unemployment rate steady at 3.8%

Nonfarm payrolls rose 196,000 in March, a solid increase on gains in private payrolls (182,000) and government (14,000). The net revision for the prior two months was up 14,000. This puts the monthly average for the first quarter 2019 at a respectable up 180,000 after 232,000 in the fourth quarter 2018. The six-month moving average is at 206,000. If the pace of job gains has slowed a bit, it is still one more than capable of absorbing new workers. Continued gains in average hourly earnings may be tempting marginalized workers to re-enter the labor force. The mild up 0.1% month-over-month for March doesn’t seem like much, but the year-over-year increase of 3.2% is not far off the near-term peak of up 3.4% in February. The average workweek edged up one-tenth to 34.5 hours. Overall, the establishment survey side of the report was reassuring that the meager gains in February were a one-off.

The household survey put the unemployment rate at 3.8%, unchanged from February. The unrounded rate was very little different as well (3.811% in March after 3.821% in February). The U-6 rate was unchanged at 7.3%. The size of the labor forced declined 224,000 with the number of employed falling 201,000 and the number of unemployed down 24,000. The participation rate dipped two-tenths to 63.0% in March.  The number of job losers in March dipped 20,000, while the number of job leavers fell 61,000 and new entrants was off 9,000.

When the FOMC next meets on April 30-May 1, the evidence for conditions in the labor market will allow it to express more confidence that while payroll gains may have faded a bit in the face of a somewhat slower economy, unemployment remains well below the Fed’s longer-run expectation of around 4.3%. This is not data that will encourage the Committee to do more than extend their wait-and-see approach to monetary policy.

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