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Economy in Brief

U.S. Employment Growth Weakens
by Tom Moeller  April 6, 2012

March nonfarm payrolls grew a modest 120,000 (1.5% y/y) following a revised 240,000 February increase and a 275,000 January gain, which both were little-revised. The gain disappointed expectations for a 210,000 rise. From the household survey, the unemployment rate slipped to 8.2% versus expectations for an unchanged 8.3%.

Nonfarm payrolls grew a slower-than-expected 120,000 last month after a 240,000 worker increase in February (revised from 227,000) and 275,000 rise in January (revised from 284,000). The latest rise reflected 7,500 (8.0% y/y) fewer temporary help jobs which followed seven months of strong increase. That fostered a weaker 90,000 gain in private services employment versus February's 204,000 rise. Overall professional & business services jobs grew 31,000 (3.5% y/y) in March after an 86,000 rise in February while education & health services job growth slowed to 37,000 (2.3% y/y) from 66,000. Total jobs in retail trade fell 33,800 (+0.9%) last month following a 28,600 decline in February. Leisure & hospitality employment rose 39,000 (2.5% y/y) after a 45,000 February rise.

Elsewhere, construction jobs fell 7,000 (+1.0% y/y) and roughly repeated the February fall. Conversely, factory sector jobs grew a firm 37,000 (2.0% y/y), logging the fourth consecutive month of strength. Jobs in the government sector remained under pressure and slipped 1,000 (-0.9% y/y) as jobs in local government fell 3,000 (-0.8% y/y) and federal government employment was unchanged (-1.8% y/y), only the second month in the last twelve when payrolls here it did not fall. Jobs in state government increased 2,000 (-0.8% y/y).

Average weekly hours worked in the private sector slipped marginally to 34.5 and left the Q1 average up slightly from Q4. Longer hours and employment growth pulled the Q1 aggregate of the two up 3.7% (AR) versus Q4, after that period's 2.6% rise.

Average hourly earnings rose 0.2% (1.8% y/y). That reflected a 0.2% increase (1.5% y/y) in the goods producing sector and a like 0.2% rise in private services (1.8% y/y). Factory sector earnings rose 0.2% (0.8% y/y) compared to a 0.2% gain (3.3%) in financial activities and a marginal slip (+2.5% y/y) in education & health. In the information sector, earnings fell for the third straight month (+0.6% y/y).

From the household survey, the unemployment rate slipped to 8.2%, its lowest level since January of 2009. A broader measure of unemployment which includes marginally attached workers and those working part time for economic reasons fell to 14.5%, also its lowest since January 2009. Household sector employment fell 31,000 (+1.6% y/y) while the size of the labor force slipped 164,000 (+0.9% y/y). The labor force participation rate versus the size of the population fell to 63.8%, down from its 2007 average 66.0%. Those not in the labor force rose 2.7% y/y, roughly the same rise as during the last three years.

The figures referenced above are available in Haver's USECON database. Additional detail can be found in the LABOR and in the EMPL databases. The expectation figures are from Action Economics and are in the AS1REPNA database.

Reconciling Contrasting Signals in the Labor Market: The Role of Participation from the Federal Reserve Bank of New York can be found here.

Employment: (M/M Chg., 000s) Mar Feb Jan Y/Y 2011 2010 2009
Payroll Employment 120 240 275 1.5% 1.2% -0.7% -4.4%
  Previous -- 227 284 -- -- -- --
 Manufacturing 37 31 52 2.0 1.8 -2.7 -11.6
 Construction -7 -6 18 1.0 -0.2 -8.2 -16.0
 Private Service Producing 90 204 199 1.9 1.8 -0.1 -3.5
 Government -1 7 -2 -0.9 -1.7 -0.3 0.2
Average Weekly Hours - Private Sector 34.5 34.6 34.5 34.3
(Mar.'11)
34.4 34.1 33.9
Average Hourly Earnings (%) 0.2 0.2 0.1 1.8 2.0 2.4 3.0
Unemployment Rate (%) 8.2 8.3 8.3 8.9
(Mar.'11)
9.0 9.6 9.3
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