Economy watchers who became accustomed to seeing monthly U.S. job gains near or above 200,000 were probably blindsided by the Labor Department’s report that 98,000 jobs were added in March — the fewest since last May.
Economists that Reuters surveyed expected companies to add 180,000 jobs; those that Bloomberg surveyed expected 175,000.
But experts always look well beyond the headline numbers once the government releases its report. Mohamed El-Erian, chief economic adviser at Allianz SE and chairman of the President’s Global Development Council, saw what he called “signals of underlying strength” in a Bloomberg View column.
El-Erian acknowledged that job creation missed expectations in March, but he said the three-month moving average job gain is nearly 180,000, “a solid number for this stage of a historic labor-market run that has seen more than 16 million jobs created since the depth of the global financial crisis.”
El-Erian said that not only did the unemployment rate fall from 4.7 percent to 4.5 percent, but there also was a decline in the government’s measure that counts the number of part-time and discouraged workers and in overall part-time employment.
El-Erian was encouraged by a 2.7 percent annual increase in wages, although he noted that the labor participation rate stayed at 63 percent, “highlighting longstanding barriers to people who stopped looking for work but want to return to the labor market.”
“There should now be greater pressure on Congress to move forward on the pro-growth measures advocated by the Trump administration,” El-Erian added.
Reuters agreed with El-Erian that the job market remains healthy. The news service said poor weather contributed to slower hiring in construction and at leisure and hospitality companies in March.
"The disappointing gain in nonfarm payrolls in March is a bit of a head fake that doesn't reflect the underlying strength and momentum in the labor market," Scott Anderson, chief economist at Bank of the West in San Francisco, told Reuters.
Separately, a report Friday served as a reminder that American consumers are poised to spend, although they’re not splurging. The Federal Reserve said total consumer credit increased by $15.2 billion in February to a seasonally adjusted $3.79 trillion and posted an annual growth rate of 4.8 percent.
MarketWatch said the increase was consistent with estimates from economists that Econoday compiled. Revolving credit, which includes credit cards, increased at an annual rate of 3.5 percent in February, to $1 trillion, reversing a 3.2 percent drop in January. That was the first monthly decline in credit-card debt since November of 2013.
President Donald Trump has promised to spur the economy through tax reform and infrastructure investment, and monthly surveys from The Conference Board and the University of Michigan show that consumer confidence remains high.
Trump has not yet presented detailed plans to achieve his goals, but Business Insider noted Americans’ improved outlook, and markets reporter Bob Bryan said increased use of credit will be an important way to tell whether the growth the president wants to create is on the way.
This week’s key reports won’t arrive until Friday, when we will see data on retail sales and inflation for March and the University of Michigan releases its preliminary Consumer Sentiment Index for April.
Economists will watch to see whether consumer confidence remains high and whether Americans increase their spending while they await progress in Washington on the policies that they have been told to expect.
“Sentiment surveys moved sharply higher after the election on expectations of pro-business policies and tax reform,” Michelle Meyer, head of United States economics at Bank of America Merrill Lynch, told the New York Times. “So far, that hasn’t happened, and the big question is whether confidence can remain as strong.”