- US payroll employment rose 196,000 in March, slightly ahead of expectations after a surprisingly weak 33,000 gain in February
- Average job growth of 180,000 for the first quarter is solid, but slower than we saw throughout 2018
- The unemployment rate was unchanged at 3.8%, having flattened out over much of the last year
- Wage growth edged down to 3.2% year-over-year but is still close to cycle highs
As expected, February’s slowdown in job growth proved to be an aberration with payrolls picking up nicely in March. Another quarter of robust job gains supports our view that the slowdown in Q1 GDP growth will be transitory (as we’ve seen in other years when the US economy seems to get off to a slow start). We think household spending will be key in the return to above-2% growth. While the stimulative effect of personal income tax cuts will fade this year, a strong labour market should continue to support consumers. Low unemployment is driving wages higher, and aggregate weekly payroll growth is still north of 5% year-over-year. And the household savings rate is well above levels seen in the late stages of the last two cycles. While the best consumer spending growth is likely behind us, it looks like households can continue to propel the US economy forward against the dampening effect of higher interest rates.
