WASHINGTON - The payrolls data were mixed, according to the March employment report released by the Bureau of Labor Statistics Friday.
A soft gain in headline and private payroll number followed an already strong upward revision to February. Average hourly earnings grew as expected, but this was likely due to a skewed labor force from severe winter weather and calendar effects. The unemployment rate did not decline as analysts had expected as labor force participation remained strong, however it still remains at low levels.
Nonfarm payrolls saw a much softer than expected gain of 103,000 vs the 195,000 expected. Private payrolls also came in lower than expected with a 102,000 gain versus the 200,000 expected. An MNI analysis had shown a tendency of analysts to overestimate payrolls in March, overestimating in 8 of the last 10 years, so this continues that trend.
Despite analysts slightly overestimating average hourly earnings in the past eight months, the report met their expectations for a 0.3% rise, with the unrounded showing a solid +0.2992% gain. This pushed the year-over-year to +2.7% from +2.6% last month. Markets had estimated a low 0.1% rise, so this should surprise, perhaps delivering some offset to the lower than expected payrolls. Average weekly hours stayed at 34.5 in the month, along with aggregate weekly hours rising by 0.1%.
The unemployment rate remained at 4.1%, however came very close to dropping to 4.0% (4.0708% from 4.1415% in February). The participation rate fell by 0.1pp to 62.9%, but stayed higher than many analysts had forecasted. The U-6 Rate fell to 8.0% from 8.2% in February.
Payrolls in January and February were revised down by a net 50,000, reflecting an upward revision to February, but a steep downward revision to January. There were stronger gains for manufacturing (+22,000), health care and social assistance (+34,000), and professional and business services (+33,000), however there was weakness in construction (-15,000) and retail (-4,000).
