USA: employment report

  • Payrolls rose by a healthy 216,000 in March, above consensus estimates. Encouragingly as well, the unemployment rate fell further from 8.9% in February to 8.8% in March
  • Other data were also upbeat, in particular due to an upward revision of February’s average workweek. As a result, aggregate weekly payrolls (a proxy for labour income) grew by an encouraging 4.2% q-o-q annualised in Q1
  • The pace of growth in employment is accelerating and we are likely to continue to see further improvement over the coming few months

Non-farm payroll employment rose by a strong 216,000 m-o-m in March, above consensus expectations of an increase of 190,000. There was only a marginal revision for February (from +192,000 to +194,000) and for January (from 63,000 to 68,000). Net revisions thus cumulated to a small but positive +7,000.

In March, employment continued to contract in the government sector, although at a slower pace (-14,000 m-o-m, following -46,000 in February),whilst job creation in the private sector remained quite strong: +230,000,following +240,000 in February (revised up from +222,000). Job creation accelerated encouragingly over the past few monthsJob creation averaged 205,000 per month in February-March, against +110,000per month over the preceding two months. Although at this stage of the economic revival, this is far from a very vigorouspace of job creation, it does nevertheless constitute a clear encouragingdevelopment. Anyway, some further improvement seems likely over thecoming few months.

The unemployment rate fell further in March
Moreover, the unemployment rate, which had very surprisingly droppedfrom 9.8% in November to 8.9% in February, managed to ease further to 8.8%in March (consensus expectations were heading for an unchanged reading at8.9%). This represents the lowest level since March 2009. Employment in thehousehold survey rose further quite strongly (+291,000 m-o-m) and, althoughthe labour force bounced back further m-o-m (+160,000), the number ofunemployed declined by a non negligible 131,000.

Hours worked: growth remained quite healthy in Q1
The average workweek remained unchanged at 34.3 hours, while February’snumber was revised up from 34.2 to 34.3. Aggregate private hours worked(which combines the workweek with employment) were up by a relativelyhealthy 0.2% m-o-m in March, whilst February’s increase was veryencouragingly revised up from +0.2% to +0.5%. As a result, aggregate hoursrose by a healthy 2.0% q-o-q annualised in Q1, following +1.9% in Q4.Although this looks far from a spectacular improvement, it does representsome relief compared to what was suggested by the data published a monthago (+0.9% annualised, between Q4 and January-February).

Growth in proxy for wages and salaries was strong recently
Meanwhile, average hourly earnings were unchanged m-o-m, as in February,but following a strong 0.4% rise in January. The index of “aggregate weeklypayrolls” (calculated as a product of aggregate hours worked and averagehourly earnings) edged up by +0.2% m-o-m in March, following +0.6% inFebruary (revised sharply up from +0.2%). The end result was that thisindicator grew by a healthy 4.2% q-o-q annualised in Q1, following +3.7% inQ4. As this index is a good proxy for household income coming in the form ofprivate wages and salaries, it shows that income from this source is growingvery healthily, at least in nominal terms.

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