US Employment Growth Slows Sharply In March

The private workforce grew by a weak 89,000 in March, the US Labor Department reports. The gain, which fell far short of the 221,000 increase for February, is well below what the crowd was expecting. Economists were looking for a moderate increase of 170,000 in private-sector employment last month, according to Econoday.com’s consensus forecast. Meanwhile, the strong ADP Employment Report for March hinted at even faster growth at the close of the third quarter. Today’s update from Washington, however, presents a dramatically softer tone for the US labor market.

Some analysts advise against assuming the worst. “Even if payrolls are slowing down, I’m not sure that that means the labor market is weakening,” Stephen Stanley, chief economist at Amherst Pierpont Securities, tells Bloomberg. “To the extent that it is slowing down or going to slow down, it’s probably more a function of tight supply than weakening demand.”

“It was not a particularly good number, that’s for sure, but I think one of the things we have to do in fairness is take out the retail number,” JJ Kinahan, chief strategist at TD Ameritrade, adds via CNBC. “Let’s face it, retail stores are trying to figure out what is the proper balance between brick-and-mortar and online sales. If you do take that number out, it’s not quite as bad a jobs report.”

It’s also worth reminding that month-to-month employment numbers can be noisy and history suggests taking any one data point with a grain of salt. Recall that the May 2016 change in private employment fell to nearly zero (+17k), prompting worries at the time that the US economy was destined for a new recession. As it turned out, employment growth bounced back and the economy continued to grow at a moderate pace.

Revisions can be dramatic as well. It’s not unusual to see big gains or losses moderate, sometimes dramatically, in the second and third round of estimates for a given month.