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Economy in Brief

U.S. Payroll Growth Slowed, Unemployment Fell
by Tom Moeller April 1, 2005

Non-farm payrolls rose just 110,000 in March and the prior month's gain was revised lower to 243,000. Consensus expectations had been for payrolls to rise 220,000 last month.

The household survey, however, indicated that the unemployment rate fell back to 5.2% as a result of a 357,000 (+1.5% y/y) worker rise in employment. The number of job losers fell 196,000 (-15.4% y/y). The labor force rose 25,000 (1.0% y/y) but the labor force participation rate held steady at a low 65.8% versus a high in 2000 of 67.3%.

Factory sector payrolls fell 8,000 and the prior month's gain was revised lower. The breadth of hiring gain rose slightly to a still narrow 44.0%. Six-month breadth was only 39.3%.

Private service producing payrolls rose 77,000 (1.9% y/y) in March and the prior month's gain was lowered. The slowdown in hiring versus earlier months spread throughout industry. Professional & business service jobs grew 27,000 (3.8% y/y) and financial jobs edged up 2,000 (2.0% y/y). Jobs in retailing fell 9,700 (+0.6% y/y) though the gain in education & health services jobs firmed to 23,000 (2.3% y/y). Total government employment rose 9,000 (0.8% y/y) but federal government jobs fell 1,000 (-0.4% y/y).

Construction jobs remained firm and rose 26,000 (3.6% y/y).

The index of aggregate hours worked (employment times hours worked) rose 0.1% (+2.5% y/y) in March and the 1Q average is 2.0% (AR) ahead of 4Q04.

Average hourly earnings increased 0.3% but earnings in manufacturing fell 0.2% (2.4% y/y).

Gains in U.S. Productivity: Stopgap Measures or Lasting Change? from the Federal Reserve Bank of San Francisco can be found here.

A Search for a Structural Phillips Curve from the Federal Reserve Bank of New York is available here.

Employment Mar Feb Y/Y 2004 2003 2002
Payroll Employment 110,000 243,000 1.6% 1.1% -0.3% -1.1%
  Manufacturing -8,000 15,000 0.2% -1.2% -4.9% -7.2%
Average Weekly Hours 33.7 33.7 33.7 33.7 33.7 33.8
Average Hourly Earnings 0.3% 0.1% 2.6% 2.1% 2.7% 2.9%
Unemployment Rate 5.2% 5.4% 5.7% 5.5% 6.0% 5.8%
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