This reassures those who feared a sudden collapse in hiring following a relatively unexpected slowdown in consumption since December. The resumption of hiring in construction (+16,000 jobs) and in hotels and leisure (+33,000 jobs) eases concerns about a sudden weakening of the activity. However, after 19 consecutive months of growth, manufacturing employment actually declined in March.
The overall improvement in hiring comes in a context where the unemployment rate is stable at 3.8%, which is considered close to full employment.
The release of these data comes a few days after the announcement of a recovery in construction spending in January and February, and signs of an acceleration in manufacturing activity in March. On the other hand, the disappointment comes more from the evolution of wages. The increase in average hourly wages was only 0.1% in March, compared to 0.4% in February.
In a report, ING suggests that the improving employment trend will continue in the near future. It expects payrolls growth to keep averaging 150-200,000 through the summer given reasonable economic activity. The latest economic figures have shown some signs of life with the Atlanta Fed GDPNow measure signalling 2.1% annualised growth in 1Q19 versus just 0.2% three weeks ago. At the same time the National Federation of Independent Businesses released its March labour indices yesterday and they showed a net 18% of businesses are looking to hire while the ISM employment components are also looking healthy, it notes.
However, ING thinks that there will be some lost momentum in hiring due to a lack of available labor to fill positions.
Analysts at Wells Fargo are a little bit more cautious. The job data was slightly stronger than expected, but the overall trend in hiring is easing from the robust 200K+ pace of last year. The three-month average for payroll growth has slipped to 180K in Q1 from 233K in Q4-2018. The global slowdown and trade headwinds are becoming more evident in the payroll data, with manufacturers shedding 6K jobs in Marchthe first cut in a little over a year and a half. The financial services firm also adds that temporary-help services have declined for the second time in three months, which it says suggests that the slower trend in hiring is likely to persist in the coming months.
Source: U.S. Department of Labor and Wells Fargo Securities
What does this means for the Fed?
Wells Fargo believes that despite many measures of employment remaining impressive, the pace of improvement has eased, consistent with todays payroll report suggesting a slower trend in job growth and less rapid tightening in the labor market. With job growth moderating, the unemployment rate moving sideways and wage growth showing no further signs of acceleration this month, this report gives no reason for the FOMC to alter its patient stance on making further policy adjustments any time soon.