As expected, private payrolls increased at a faster rate last month, rising 192,000 in March vs. February, according to today’s update from the US Bureau of Labor Statistics. That’s the best monthly gain since last November. But let’s not get too excited. Although it’s encouraging to see employment growth pick up, as it has in each of the past three months, the progress is modest and so the recent numbers are a return to trend as opposed to an upside surge that hints we’re on the cusp of a dramatic change for the better.
In fact, when we look at the year-over-year change (a relatively reliable measure for business cycle analysis), private payrolls continue to grow at the rate that’s prevailed for some time—roughly 2% a year. When you cut to the chase and ignore all the chatter about what’s happening with the labor market, the reality is that nothing much has changed. Employment is growing a steady pace. Yes, the recent monthly comparisons have been weak, but this looks like short-term volatility rather than a strong signal for thinking that there’s a dramatic shift afoot.
Bottom line: today’s payrolls report offers another clue for thinking that the harsh winter weather really was the reason for the weak performance in some economic indicators. The modest upturn in job creation last month follows encouraging data for the services and manufacturing sectors in March via the ISM survey indexes. Meanwhile, initial jobless claims have been trending lower lately, offering support for projecting that nonfarm payrolls will continue to rise in the near-term future. What today’s update doesn’t provide is a clear-cut reason for thinking that anything more than modest growth for employment—and the economy, for that matter—is imminent.
“This employment report should help put to rest fears that the economy was stalling as we entered the new year,” economics professor Justin Wolfers wrote in a tweet today. Agreed, but for the moment that’s about as much optimism as you can extract from the numbers du jour.