Highlights:
- Payroll employment rose a smaller-than-expected 103K following increases of 326K and 176K in February and January, respectively, that were revised from 313K and 239k previously.
- The unemployment rate held steady at February’s rate of 4.1% rather than dropping to 4.0% as had been expected going into the report.
- The annual increase in wages picked up to 2.7% in March from 2.6% in February.
Our Take:
Payroll employment growth slowed more than expected in March to 103K. Some moderation was widely expected going into the report given the outsized 326k surge in February (originally reported as up 313k) though expectations were centered around a stronger 185k increase. More robust employment gains were also expected to be reflected in the unemployment rate dropping to 4.0% from February’s rate of 4.1% though today’s report indicated that this rate remained unchanged. That said, the current unemployment rate still remains below the Fed’s assumed long-run range of 4.3% to 4.7%. Providing further confirmation of tight labour markets, the annual increase in wages rose to 2.7% in March from 2.6% in February and a 2017 average of 2.5%. The likelihood of labour markets operating beyond capacity is possibly starting to limit firms’ ability to find new workers particularly after outsized gains in recent months.
