How Big of a Problem Was March’s Jobs Report for the U.S. Economy?
Spring may be a time for growth and rebirth, but March’s jobs report certainly doesn’t reflect that. If the Bureau of Labor Statistics is trying to cultivate a pre-Easter garden, those are some wilted flowers. Maybe a couple weeds, some grass, and a few healthy perennials. It’s not that there was an increase in unemployment or a drop in growth. But when it comes to the job market, no change is never a good sign for the economy, especially during a recovery period. While a total of 126,000 nonfarm jobs were added to the market last month, the unemployment rate remained static at 5.5%, according to the BLS.
Across demographics — men and women of different race and ethnicity — stagnation was the general rule for March. There was little change in the civilian labor force participation rate, in undesirable part time employment, and in marginally attached individuals — those who were not currently looking for work but had previously been searching and temporarily have stopped searching or given up.
The slower job growth and economic conditions could be explained by a few things. One is — ironically, given our springtime metaphor — the cold and brutal weather which can have an effect both on consumers and on businesses’ transport and mechanical operations — something that has also been blamed for the slight rise in gas prices last month. But this month, the low gas prices, comparatively speaking to previous years, are being blamed for a slow down in job growth.
“The American energy industry is adjusting very quickly to low oil prices, and so we’ve seen this in the counts of the number of rigs that are active and are seeing in mining and energy-related industries,” Northern Trust Chief Economist Carl Tannenbaum told The New York Times. “The good news is, we hope, that the average consumer is saving a tremendous amount of money in lower gasoline prices.”That seems to be the most popular silver lining of this months job report; gas prices are going to help make up for whatever economic ills or sluggishness we might be seeing for a short time.
Analysts had hoped to see job increase numbers closer to 245,000 last month according to CNBC, instead seeing a shortfall of 19,000, an unfortunate trend that’s been going on for longer than just the last month. In February, the expected 295,000 was closer to 264,000, and in January the hoped for 239,000 was at 201,000. And while some blame the languor on the energy industry or brisk winter, others say the issue is actually with the U.S. dollar.
“We were due a clunker,” said John Canally, chief LPL Financial economic strategist, to CNBC. “It’s probably the same things that are going to be impacting the earnings season in a couple weeks. It’s the strong dollar hitting manufacturing, the port strike hitting manufacturing, it’s the really awful weather … but across all sectors, it was just pretty soft.”
While a positive sign across some metrics, the strengthening value of American currency hurts state economies that are more reliant on exports, even though it reminds us that the U.S. is doing well with its recovery internationally. Iowa is a good example of this, as its agricultural industry is an important part of its state income.
“Export growth has weakened. Probably the strong dollar is one reason for that. On the other hand, the strength of the dollar also in part reflects the strength of the U.S. economy,” said Fed Chair Janet Yellen, according to the Wall Street Journal. “We do see considerable underlying strength in the U.S. economy and in spite of what looks like a weaker first quarter, we are projecting good performance for the economy.”
Ultimately, last month seems to be a mixed bag: good news with some bad effects that are going to be seen more immediately. The overall message appears to be largely positive, but the current slowdown could hurt confidence, adding its own negative effects. Going back to our garden metaphor, the flowers aren’t looking very bright and colorful, but some of the dead vegetation that looks so ugly right now is actually acting as fertilizer to the wilting flowers, creating a healthier place for plant life to grow.
Follow Anthea Mitchell on Twitter @AntheaWSCS
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