Employment Growth Hits a Bump

The economy wheezed a little in March, not producing as many jobs as expected, and fewer than at any time in the last six months or so.

The economy wheezed a little in March, not producing as many jobs as expected, and fewer than at any time in the last six months or so—pointing to a slowdown in overall growth, as some other recent indicators seem to be? Too soon to tell. One month’s numbers don’t really point to anything, but they don’t bode well for growth either, or prospects for commercial real estate, especially if followed up by continuing weakness in employment in future months. The economy had been chugging along lately, creating a lot of jobs, though the job creations numbers for January and February were revised downward somewhat, according to the Bureau of Labor Statistics, meaning that for the last three months, 197,000 jobs were created each month on average—respectable, but not on fire.

On Friday, the BLS reported that payroll employment increased by a net of 126,000 jobs, a mediocre reading, though job growth continued in professional and business services (which is good for the office market in the long run), health care (good for medical offices) and retail trade (good for retail properties). Job losses continued in mining, which points to the impact of the drop in energy prices, because the BLS counts support activities for mining in this category, which includes support for oil and gas extraction. Employment in mining fell by 11,000 in March, bringing job losses for the first quarter of 2015 to a total of 30,000. In 2014, mining had added 41,000 jobs.

The headline unemployment rate, which is based on the separate household survey by the BLS, didn’t move in March, staying at 5.5 percent. That’s an improvement compared with a year ago, when it was 6.6 percent—the result of all the hiring since then. The bureau’s U-6 unemployment rate, which in some ways a better reflection of the state of the jobs market, edged down a little in March, coming in at 10.9 percent, compared with 11 percent in February. A year ago, the U-6 was 12.6 percent. The U-6 metric, according to the BLS, includes “total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons…”

Wages are still stuck in slow-motion growth as well. Average hourly earnings of all employees on private payrolls rose by 7 cents in March to $24.86, the bureau noted, and over the past 12 months, average hourly earnings have risen by 2.1 percent. That’s not bad, but not enough to say that wage growth is as robust as productivity growth or corporate profits. Wages are, at least, managing to stay ahead of overall inflation, since from February 2014 to February 2015, the Consumer Price Index for All Urban Consumers declined by 0.1 percent—meaning that over that period, there was essentially no overall inflation, mainly because of the drop in energy prices.