Until now, U.S. job growth had been accelerating nicely. But along came the March 2015 jobs report indicating that a miniscule 126,000 net new jobs(preliminary) were added and uncertainty as to direction of the economy is now front and center. This has economists scratching their heads as to why the drop. Given a consensus forecast of 246,000 new jobs, and an average 269,000 each month for the prior 12 months, no matter how you look at it, job growth unexpectedly fell far short of expectations.
The following graph shows the Net new jobs monthly for 2014 and through March for 2015.
Other metrics within the jobs report include:
- 93.2 million U.S. workers were considered Not in the Labor Force in March – an all-time record high. Correspondingly, the labor participation rate dipped to 62.7 percent
- The 126,000 jobs added (preliminary) was the smallest net new job gain since December 2013
- Average hourly earnings increased at a modest 2.1 percent on a year-over-year basis
- Employment gains for January and February were restated downwardly by 69,000. January was revised from a growth of 239,000 new jobs to 201,000 and February dropped from 295,000 to 264,000
- Long-term unemployed (jobless for 27 or more weeks) was essentially flat at 2.6 million people and represented 29.8 percent of the total unemployed
- Those employed part-time but desiring a full-time job (known as Involuntary Part-Time Workers) also remained unchanged at 6.7 million
- Professional and business services added 40,000 new jobs in March. This sector added an average 59,000 jobs per month in 2014. In the first quarter of 2015, the average was 34,000 new jobs per month
- Healthcare grew by 22,000 in March
- Retail trade jobs were up 26,000 in March, similar to the prior 12 months
- Mining employment declined just 11,000 jobs – and when I include the word “Just” that is because oil and gas extraction
- Food services and drinking places, after adding 66,000 new jobs in February, increased by a negligible 9,000 jobs in March
The short-term implication is simple: the Federal Reserve likely again will delay increasing the Fed Funds Rate deeming the U.S. economy too fragile to handle rising rates.
The White House’s opinion is that the lower-than expected employment numbers were a combination of bad weather and a global economic slowdown. It they are correct, then just the weather portion of the short-fall is temporary.
Is it a short term blip or a longer-term direction? My money right now is that this a merely a blip. But I also thought Kentucky would go the season undefeated.
What’s your take?
Ted