It seems like every twist and turn in the US employment data is being observed under a microscope. But don’t let the weak job numbers in March fool you—the underlying trends still point to continued improvements on the employment front.
In March, payroll employment rose 120,000, while the jobless rate fell 0.1 points to 8.2%, according to data from the Bureau of Labor Statistics released on April 6. The muted improvement raised concerns that the labor market might be backsliding after a solid run of gains. I don’t think that’s the right conclusion, for a few reasons.
First, this was just the initial report for March, and we have seen a series of upward revisions to payroll data over the past several months. When you look at more comprehensive reports the scope for more revisions is clear. The Quarterly Census Employment and Wages (QCEW) report for the third quarter of 2011, which was released on March 28, shows that even after revisions, there was a substantial undercount of jobs, hours, wages and income.
Second, it’s too early to conclude that the smaller gains in March were the result of a weather-related boost to job creation in the previous months. However, even if job growth in March was dampened a bit by the strong results of the previous months, that doesn’t mean the gains in jobs, work hours and wages in January and February were any less important. You have to look at the entire quarter in order to get a perspective on what’s going on. I think the initial results are impressive and point to improving underlying trends.
For example, the payroll job gain of 635,000 in the first quarter was the best since the first quarter of 2006, and the 1.345 million gain in household employment was the best since the first quarter of 2000. Hours worked expanded at an annualized rate of 4.1%, the third-largest gain in the past 14 years. And the unemployment rate fell 0.3 points during the period to 8.2%—the lowest rate since January 2009.
Third, if the US economy were entering a weakening phase, it would show in demand and order flow well before showing in the jobs data. I’m not seeing that at all. Retail sales are picking up. Auto sales are booming. And the Institute for Supply Management’s manufacturing and non-manufacturing orders indices for March point to ongoing gains after a strong February.
Taken together, I think the evidence supporting a solid and steady recovery of the US job market clearly outweighs a single month in March. Of course, we can’t avoid looking at monthly data, but we can avoid reading too much into it.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AllianceBernstein portfolio-management teams.
Joseph G. Carson is US Economist and Director of Global Economic Research at Alliance Bernstein.