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The recovering US job market continued to march forward in March.
Nonfarm payrolls rose by 215,000 vs. a monthly average of 223,000 the previous 12 months. Just keepin’ on, keepin’ on. The unemployment rate edged up to 5.0% but for positive reasons as labor force participation continues to rise. Overall, the labor force grew by nearly 400,000. As Capital Economics notes: “…the labor force has now increased by more than two million in the past five months alone. The participation rate has jumped from a low of 62.4% last September to a two-year high of 63.0% this March. This is a remarkable turnaround in terms of both its speed and magnitude.”
Some context: If the participation rate were holding steady, the jobless rate would be 4%. Actually, both the participation and employment rate seem to breaking higher in recent months:
Particularly positive is the rebound in employment among prime-age workers, those aged 25 to 54.
Other bits of good news: While average hourly earnings are up just 2.3% the past year, combine that rise with an increase in hours worked gets you a total wage increase of 4.2%, notes FirstTrust research. And RSM US economist Joe Brusuelas notes that with “only 1.4 individuals available in the labor force for every job opening the labor market will continue to tighten, setting the state for wage gains going forward.” As this chart illustrates:
And this nice summary from JPMorgan’s Mike Feroli:
Given our expectation for GDP growth of 1.3% (after today’s construction report), this spells another quarter of negative productivity growth. Yellen’s supply-side experiment is looking on shakier grounds when it comes to the purported productivity benefits of running the economy hot, though in fairness she never expressed too much confidence in her outlook for a productivity acceleration. The growth message from today’s report is, to quote Aaron Rodgers, r-e-l-a-x: the economy is not great but it’s not falling off a cliff either. The Fed message is neutral to slightly dovish. Increasing participation is acting as a pressure relief valve on the labor market, obviating any need for a hurried path to the second rate hike.