Previous post Next post

US Jobs Growth Disappoints

The US jobs growth slowed considerably more than expected in March and the disappointment pushed the dollar and equities initially lower. 

 

United States

Nonfarm payrolls

The US created 98k jobs in March, well below market expectations for around 175k jobs. Adding insult to injury, revisions to the January and February data took off another 38k job.

U.S. Nonfarm Payrolls, March 2017

(see more posts on U.S. Nonfarm Payrolls, )
U.S. Nonfarm Payrolls, March 2017

Source: investing.com - Click to enlarge

Unemployment Rate

However, there were a couple of bright spots. First, the unemployment unexpectedly fell to 4.5% from 4.7%. This is a new cyclical low.

 

U.S. Unemployment Rate, March 2017

(see more posts on U.S. Unemployment Rate, )
U.S. Unemployment Rate, March 2017

Source: investing.com - Click to enlarge

Average Hourly Earnings

Wage growth also failed to meet expectations as the year-over-year pace slowed to 2.7% from 2.8%.

U.S. Average Hourly Earnings, March 2017

(see more posts on U.S. Average Earnings, )
U.S. Average Hourly Earnings, March 2017

Source: zerohedge.com - Click to enlarge

Participation Rate

Most importantly, the decline in the unemployment rate was recorded even though the participation rate was unchanged at 63%. Also, the underemployment rate fell to 8.9%, which is also a new cyclical low. Those taking part-time work, even though full-time work is desired, fell by 151k.

U.S. Participation Rate, March 2017

(see more posts on U.S. Participation Rate, )
U.S. Participation Rate, March 2017

Source: investing.com - Click to enlarge

There are two drivers of the slower job growth. First, jobs growth in January and February exaggerated the underlying of hiring. Second, the weather seemed to skew the data. February was the second warmest February on record, and then the winter storm that struck East Coast in March.  Both elements seemed evident in the construction sector. After a 59k hiring spree in February, job growth slowed to a mere 6k. Retailers also seemed to be similarly impacted. A combination of macro considerations (slower consumption in Q1 after a robust Q4 16) and weather led to a 30k job loss.

US yields have softened, and the 10-year yield is holding a little above the 2.30% level that has represented a floor. The dollar initially fell on the news but has recovered those initial losses.  The JPY110 continues to limit the greenback’s losses against the yen. The euro spiked to about $1.0665 before returning to the session lows near $1.0610. The Canadian dollar is the strongest of the majors, gaining about 0.35% against the US dollar, and is trading at new highs for the week.

 

Canada

Meanwhile, Canada reported stronger jobs growth than expected in March, continuing the string of robust reports. Canada created 19.4k jobs in March, more than three times the median expectation of the Bloomberg survey and more than the 15.3k jobs grown in February.  These were nearly all full-time positions.

Canada Employment Change, March 2017

(see more posts on Canada Employment Change, )
Canada Employment Change, March 2017

Source: investing.com - Click to enlarge

The cloud in the silver lining was the unemployment rate, which ticked up to 6.7% from 6.6%.

Canada Unemployment Rate, March 2017

(see more posts on Canada Unemployment Rate, )
Canada Unemployment Rate, March 2017

Source: Investing.com - Click to enlarge

 As the participation rate rose to 65.9% from 65.8.%.

Canada Participation Rate, March 2017

(see more posts on Canada Participation Rate, )
Canada Participation Rate, March 2017

Source: Investing.com - Click to enlarge

 

Full story here Are you the author?
Marc Chandler
He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.
Previous post See more for 4.) Marc to Market Next post
Tags: ,,,,,,,,,,,,,

Permanent link to this article: https://snbchf.com/2017/04/chandler-jobs-growth-disappoints/

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

This site uses Akismet to reduce spam. Learn how your comment data is processed.