The official U-3 unemployment rate edged down to 7.6 percent in March, according to the Bureau of Labor Statistics. While any decrease in the headline rate is good news, the Employment Situation report showed that private payrolls increased by just 88,000, far below the increase of 193,000 that economists were expecting.
At the end of the day, the report was a disappointment for market optimists because the unemployment level dropped for the wrong reason. According to the report: “The civilian labor force declined by 496,000 over the month, and the labor force participation rate decreased by 0.2 percentage point to 63.3 percent. The employment- population ratio, at 58.5 percent, changed little.”
Over the past 12 months, employment growth has averaged 169,000 per month. This is a fairly modest rate, and in turn supports a moderately positive thesis about the labor market recovery. On Friday, the BLS released its Regional State Employment and Unemployment report, which mostly supported the idea of a healing labor market. The unemployment rate decreased in 39 states and the District of Columbia year over year, and increased in just eight (three states had no change).
However, the report also showed that 11 states and the District of Columbia still had unemployment rates that were significantly higher than the national average…