In this morning’s data, the economy added 178,000 jobs in March, much higher than expected. Reviewing the individual industries, the Leisure and Hospitality industry and Health Care and Social Assistance industry were relatively strong, while the Financial Activities industry was relatively weak. The Unemployment Rate ticked one tenth lower to 4.3%. Average Hourly Earnings increased 0.2% in March, less than expected, and grew 3.5% on an annual basis. The Labor Force Participation Rate was 61.9%, slightly less than expected, and Average Weekly Hours were 34.2, which is one tenth less than the previous month.
Overall, a decent report as headline payrolls rebound from last month’s negative figure and the unemployment rate decreases. Strength in hiring was seen in leisure and hospitality as well as health care, while hiring in financial activities was weak. Wages grew less than in the previous month, but the annual figure is slightly above the 30-year average. Meanwhile, both participation and weekly hours were slightly less than the previous month.
Even with the wide range of headline payroll readings in recent reports, the labor market appears steady with an average increase of 68,000 over the past three months. Meanwhile, uncertainty hovers over the outlook given the geo-political unrest and higher oil prices due to the conflict with Iran. Consumers may begin to receive higher tax refunds as part of the OBBBA; however, those proceeds may first be allocated to higher gasoline costs as long as oil prices remain elevated. Given this backdrop, the timing of when energy prices fall from current levels and how the Federal Reserve policy unfolds will be keys for the economy and markets in the months ahead.
In all, the yield on the 10-year US Treasury is higher following the report and equity markets are closed today given the observance of Good Friday. Have a safe and enjoyable weekend!
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