U.S. employers cut back sharply on hiring in March, yet Friday’s jobs report still had much to be encouraged about, including a drop in the unemployment rate to 4.5 percent, the lowest in a decade.
Employers added just 98,000 jobs, the Labor Department said. It was barely half the previous month’s gain.
Yet unemployment dropped from 4.7 percent, reaching its lowest point since May 2007. While the rate has fallen in the past because of unemployed workers who had given up looking, it happened this time because of a healthy gain in the number of people with jobs.
“Within the disappointing 98,000 net new jobs added, there seems to be a lot more going on beneath the surface, and what is going beneath the surface is mostly good,” said Mark Vitner, an economist at Wells Fargo.
Here are the positive aspects of the report, followed by some parts that were not so hot:
Job growth still OK: In the past three months, employers have added an average of 178,000 jobs a month. That’s much better than March’s increase and is closer to the underlying trend, economists said.
That’s also just below the average gains of 187,000 jobs a month last year. Hiring should rebound closer to that level in the coming months, economists say.
Hit from weather probably temporary: One reason last month’s weak gain was probably a blip is that harsh winter weather in New England and the Midwest most likely hurt hiring in construction, retail and other weather-sensitive industries. Also, construction companies reported huge job gains in January and February, when the weather was unseasonably warm, so they didn’t need to engage in their usual spring hiring.
Better jobs: The job gains last month, while tepid, occurred in better-paying industries, such as manufacturing and a category that includes accounting, engineering and other professional services.
Lower-paying fields, such as retail, cut jobs, while a category that includes restaurants and hotels posted a small gain.
And all the new jobs added were full time, the government said. The number of Americans who are working part time but would prefer a full-time job fell.
An alternative unemployment measure, which includes involuntary part-time workers, fell to 8.9 percent, its lowest level since December 2007, when the Great Recession started.
That’s down from a peak in 2010 of 17.1 percent.
Yet there were some discouraging signs:
More optimism, same economy: Consumer and business optimism has soared since the presidential election. Many companies eagerly await the tax cuts and deregulation promised by President Donald Trump.
Yet so far, there is little evidence that better sentiment has translated into more hiring, spending or economic growth. Companies are adding workers at the same pace they did last year. And consumers trimmed their inflation-adjusted spending in January and February.
Stagnant wages: Average hourly earnings climbed 2.7 percent over the past year, not much of a win for workers. And after factoring in inflation in the past year, paychecks are essentially flat.
“Right now, real wages are basically stagnant,” said Megan Greene, chief economist at Manulife Asset Management. “That’s why things like retail sales growth and other indicators for consumer demand have been so anemic.”
The situation is even tougher for front-line workers, who account for the majority of all jobs. Their wages have risen just 2.3 percent, so after inflation they have fallen.
Hiring not widely spread: The drop in the unemployment rate is good news, but it doesn’t mean everyone has benefited. Women made up nearly all those who gained jobs, with the unemployment rate for adult men unchanged, at a still-low 4.3 percent.
Retail sheds jobs again
U.S. retailers cut jobs in March for a second straight month as department stores and clothing shops cut costs to contend with the shift to online shopping.
Retailers slashed nearly 30,000 positions after a similar trend in February. Over two months, the retail sector has lost 60,600 jobs.
The cuts stemmed from weakness in certain types of stores. Those selling clothes, general merchandise and health goods reduced their payrolls. By contrast, stores specializing in electronics, building supplies and food added jobs.
U.S. jobs report: A tale of 2 surveys
The U.S. unemployment rate fell to 4.5 percent in March, the lowest level in nearly a decade, from 4.7 percent, and an encouraging sign for the job market. Yet employers added just a meager 98,000 jobs — barely half the pace of January and February.
How did the unemployment rate manage to drop so much when the job gain was so weak?
The reason relates to a little-known fact about the government’s monthly jobs report: The government conducts one survey to learn how many jobs were created and another to determine the unemployment rate. And the two surveys sometimes produce conflicting results.
One is called the payroll survey. It asks mostly large companies, nonprofits and government agencies how many people they employed during the month. This survey produces the number of jobs gained or lost. For March, the payroll survey showed that employers added 98,000 jobs.
The other is the household survey. Government workers ask whether the adults in a household have done any work for pay that week. Those who have not are asked whether they’re looking for a job. If they are, they’re considered unemployed. If they have not looked in the previous four weeks, they’re not considered part of the workforce and aren’t counted as unemployed. The household survey produces each month’s unemployment rate.
In March, the household survey showed that 472,000 more people found jobs. That lowered the number of unemployed and cut the unemployment rate.
The household survey, unlike the payroll survey, captures farm workers, the self-employed and people who work for new companies. It also does a better job than the payroll survey of capturing hiring by small businesses.
But the household survey is more volatile from month to month. The Labor Department surveys just 60,000 households, out of more than 100 million U.S. households.