From Real Time Economics:
Economists and others weigh in on the 88,000 increase in jobs and drop in the unemployment rate.
–This labor market report was unambiguously weak,
and to the extent that it is a reflection of economic activity more
generally, it suggests that the recovery ended the quarter on a very
weak footing. In some ways, the weak tone in the labor market provides
some vindication for the Fed’s caution at the March meeting, and if
anything it may cause them to be even more concerned about the outlook
as the slowdown in labor market activity points to a more dramatic
rollover in growth than they may have incorporated in their forecasts. –Millan L. B. Mulraine, TD Securities
–Since we have seen a similar pattern
of a strong start to the year followed by weakness in recent years,
there has been suspicion of skewed seasonal factors post recession
because of the very sharp cuts in early 2009. However, the BLS has
indicated that the impact would be small and, moreover, fade with each
passing year. –Sophia Koropeckyj, Moody’s Analytics
–We are not ignoring the slowing in hiring
in March but think it represents some payback for exaggerated
acceleration earlier in the quarter — much as ISM indexes also
suggested. Some of that may be due to an exaggerated inventory cycle:
Extreme weakness in inventories in Q4, rapid restocking in January and
February, then a bit of a pause. Aggregate hours worked in goods
production (-0.1%m/m after +1.2%) were weaker than those in services
(0.1% after 0.5%), consistent with a “return to normal” in goods output
growth. We will watch the claims data carefully for confirmation of a
change in trend in the labor market.– Drew T. Matus, UBS
–We suggest looking at longer-term averages
to assess the state of the economy and labor markets. In that regard,
the three-month average rate of payroll growth is now 168,000, about in
line with the 175,000 monthly average increase in 2011 and 183,000
average in 2012, and consistent with our forecast for an average
increase of 169,000 payrolls in 2013. Our view is that the February
employment report overstated strength in the labor market, and the March
report likely overstates any weakness. The trend in payrolls is
consistent with our expectation that employment growth will slow
somewhat in coming months as the large, and increasing, fiscal drag is
absorbed, and it should reinforce the willingness of the Fed to keep its
asset purchase program in place. –Michael Gapen, Barclays Capital
...
MORE
