NFP: U.S. hiring rebounds more than expected in March

by Ike Obudulu Posted on April 5th, 2019

Washington: U.S. hiring rebounded more than forecast in March and the prior month was stronger than first reported, potentially relieving some concerns about a cooling economy. Wage gains eased and the unemployment rate held near a 49-year low.

Payrolls rose 196,000 after a 33,000 advance, a Labor Department report showed Friday. The median estimate in economists consensus survey saw an increase of 177,000 after an initially reported 20,000 gain in February.

The jobless rate was unchanged at 3.8 percent, while average hourly earnings increased 3.2 percent from the prior year, below all estimates and down from the best pace of the expansion.

The data signal the labor market is solid enough to support economic growth in coming months even if job gains are moderating from last year’s pace. Unemployment near historic lows bodes well for consumer spending, though weaker wage gains suggest inflation will be even more muted as Federal Reserve policy makers wait to see how the U.S. economy weathers a global slowdown.

The data come as investors expect an interest-rate cut this year after four hikes in 2018. The Fed early in 2019 removed projections for rate rises in the near term while flagging increasing economic risks amid slowing global growth.

Payroll gains were led by education and health services as well as professional and business services. Construction payrolls rebounded with a 16,000 gain while manufacturing continued to weaken with a loss of 6,000 jobs. Other data had earlier shown a mixed picture for factory employment.

The participation rate, or share of working-age people in the labor force, decreased to 63 percent from 63.2 percent the prior month. The rate, which faces continued downward pressure as older workers retire, had ticked up in recent months as increased employer demand has pulled in more Americans.

Combined revisions for January and February added 14,000 more jobs than previously reported, though the three-month average decreased to 180,000 from 191,000.

Average hourly earnings rose 0.1 percent from the prior month, missing estimates, following a 0.4 percent gain. A longer workweek may also have had an impact on wages: The average for all private employees increased to 34.5 hours from 34.4 hours. A longer workweek tends to reduce average hourly pay.

The U-6, or underemployment rate, held at 7.3 percent; the gauge includes part-time workers who’d prefer a full-time position and people who want a job but aren’t actively looking.

Private employment also rebounded to show a 182,000 gain after an upwardly revised 28,000 increase; government payrolls expanded by 14,000.

Nonfarm Payroll (NFP) Report

The Nonfarm Payroll (NFP) report is released on  the first Friday of every month at 8:30 AM ET (Eastern Time) by the U.S. Bureau of Labor Statistics. NFP is a highly anticipated economic report which signals the strength of the US economy. It reveals the health of the jobs market, which filters down into inflation

It is closely analysed to predict Gross Domestic Product (GDP) growth and inflation rates and has the power to move global financial markets.

Economic indicators in the NFP report that markets and policy makers care about the most are Non-Farm Employment Change, Average Hourly Earnings and the Unemployment Rate:

Non-Farm Employment Change

Non-Farm Employment Change measures change in the number of employed people during the previous month, excluding the farming industry. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity

Average Hourly Earnings

The wages growth data, Average Hourly Earnings, measures change in the price businesses pay for labor, excluding the farming industry. It’s a leading indicator of consumer inflation – when businesses pay more for labor the higher costs are usually passed on to the consumer;

Unemployment Rate

Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month.

Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions.

Unemployment is also a major consideration for those steering the country’s monetary policy, especially the Federal Open Market Committee, FOMC.

Economy Docket

Baker-Hughes Rig Count for the week will be released at 1.00 pm ET. In the prior week, the North American Rig Count were 1094 and U.S. Rig Count were 1006.

Fed’s Consumer Credit for February will be issued at 3.00 pm ET. The consensus is for $17.0 billion, unchanged from January.

Atlanta Federal Reserve Bank President Raphael Bostic will participate in a lecture and discussion on “Disruption and Opportunity: Shaping Policy in a Digital World” at the Andrew Young School of Policy Studies and the Fiscal Research Center at Georgia State University in Atlanta, Georgia, followed by audience Q&A at 3.30 pm ET.

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