Although it may seem like a lame excuse, stormy weather in March, which followed mild conditions in February, caused job creation to slump in March. The economy added a lower than expected 98,000 jobs and the number of Americans who were not at work due to bad weather was 195,000 in this report, 55,000 more than the historic number of 140,000. Adding back those employees, the reading was 153,000, somewhat weaker than the 175,000 expected, but well within the general range.
The impact of the weather was seen clearly in the construction sector, which gained 58,000 in February and just 6,000 in March. The unemployment rate dropped to 4.5 percent as more people landed jobs, the lowest since May 2007 and more encouraging, the stubbornly high broader rate (U-6), which includes part timers who seek full time positions and those who are “marginally attached” to their current jobs, fell to 8.9 percent, the lowest level since December 2007 and nearing the pre-recession average of about 8.5 percent.
Meanwhile, the Federal Reserve was not expected to increase short term interest rates until its June meaning, at which time, there will be more evidence about the overall pace of economic growth, labor market conditions and inflation. According to analysts at Capital Economics, if monthly job creation were to drop to 150,000 to 170,000, it would be sufficient “to keep the unemployment rate on a gradual downward trend. With the unemployment rate already at the Fed’s estimate of the natural equilibrium rate, this isn’t going to stop the Fed from hiking interest rates again in June.”
Bottom line on this report: we need more data to confirm whether or not the labor market is downshifting or if March was a one-off event.
WHERE ARE THE BIG MONEY JOBS? Days before the monthly jobs report, the Labor Department’s Occupational Employment Statistics program reinforced what we know: a career in science, technology, engineering and mathematics (STEM) occupations, pays more than most other options. According to the report, STEM jobs had an average annual wage of $89,400 last year, compared with $46,950 for non-STEM.