Job Growth Hits a Bump

The economy wheezed a little in March, not producing as many jobs as expected, and fewer than at any time in that last six months or so. Could this be a sign of slowing growth?

The economy wheezed a little in March, not producing as many jobs as expected, and fewer than at any time in that last six months or so. Does this point to a slowdown in overall growth, as some other recent indicators seem to?

Too soon to tell. One month’s numbers don’t add up to a trend, but they don’t bode well for growth or for commercial real estate, especially if followed up by continuing weakness in employment. The economy had been chugging along lately, creating a lot of jobs, though the job creation numbers for January and February were revised downward somewhat by the Bureau of Labor Statistics. In each of the last three months, 197,000 jobs were created on average–a respectable performance, but no blockbuster.

On Friday, BLS reported that payroll employment increased by a net of 126,000 jobs, a mediocre reading. Still, job growth continued in professional and business services (good for the office market), health care (ditto for medical offices), and retail trade (a plus for retail properties).

Job losses continued in mining, a sign of falling energy prices, because the BLS counts support activities for oil and gas extraction in this category.  Mining employment fell by 11,000 in March, bringing losses for the first quarter to 30,000. By contrast, mining added 41,000 jobs during the first quarter of 2014.

The headline unemployment rate, which is based on the separate household survey by the BLS, didn’t move in March, staying at 5.5 percent. That’s an improvement compared with a year ago, when it stood at 6.6 percent — the result of all the hiring since then. The bureau’s U-6 unemployment rate, which in some ways is a better reflection of the jobs market, edged down slightly in March to 10.9 percent, compared with 11 percent in February. A year ago, the U-6 was 12.6 percent. The U-6 metric, according to the BLS, includes “total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons…”

Wage growth is still stuck in slow motion as well. Average hourly earnings of employees on private payrolls rose 7 cents in March to $24.86, the bureau noted, and over the past 12 months, average hourly earnings have risen by 2.1 percent. That’s not bad, but not enough to say that wage growth is as robust as productivity growth or corporate profits. Wages are, at least, managing to stay ahead of overall inflation, since from February 2014 to February 2015, the Consumer Price Index for All Urban Consumers declined by 0.1 percent. In other words, there was essentially no overall inflation, mainly because of the drop in energy prices.