The labor market continues to add workers, but wage increases are not keeping pace with inflation. Here are the five things we learned from U.S. economic data released during the week ending April 1.
Payrolls gains slowed a bit (but the labor market kept its momentum) in March. Nonfarm employers added a seasonally adjusted 431,000 workers to their payrolls during the month. This followed payroll gains of 504,000 and 750,000 in January and February. (Bureau of Labor Statistics’ revisions added a combined 95,000 jobs to their previously reported January and February estimates). Payrolls remained 1.579 million below their pre-pandemic peak of February 2021. All but 5,000 of March’s gain came from the private sector, with increases between the goods-producing side of the economy and the service sector of +60,000 and +366,000, respectively. Industries adding the most workers in March were leisure/hospitality (+112,000), professional/business services (+102,000), and retail (+49,000). Average weekly earnings were up 4.6 percent from a year earlier to $1,097.86.
The unemployment rate fell by 2/10ths of a percentage point to 3.6 percent, just above its pre-pandemic February 2020 reading of 3.5 percent. 418,000 people entered the labor force in March as the labor force participation rate added 1/10thof a percentage point to 62.4. The participation rate for adults aged 25-54 rose by 3/10ths of a percentage point to 82.5 percent. The median length of unemployment dropped by 2.1 weeks to 7.5 weeks, while the number of part-time workers who wants a full-time job inched up by 35,000 to 4.170 million. The broadest measure of labor underutilization—the U-6 series—fell by 3/10ths of a percentage point to 6.9 percent, which was below its February 2020 reading.
Real consumer spending fell as inflation ate away income gains. The Bureau of Economic Analysis reports that real Personal Consumption Expenditures (PCE) dropped a seasonally adjusted 0.4 percent in February following a 2.1 percent surge during the previous month. Spending on goods slumped 2.1 percent, with declines for durable and nondurable goods of -2.5 percent and -2.1 percent, respectively. Expenditures on service rose 0.6 percent. Without price adjustments, nominal PCE inched up 0.2 percent, funded by a half percentage point gain in nominal personal income and a 0.4 percent bump in nominal disposable income. After price adjustments, real disposable income declined 0.2 percent. The savings rate added 2/10ths of a point to +6.3 percent. Real spending was up an impressive 6.9 percent from a year earlier, even as real disposable income was off 1.6 percent. Inflation remained a significant factor as the PCE price index jumped 0.6 percent during the month and was up 6.4 percent from a year earlier. Net of energy and food, the core PCE price index rose 0.4 percent in February and was 5.4 percent above year-ago levels.
Hiring picked up in February, but many job openings remained unfilled. The Bureau of Labor Statistics estimates that there were a seasonally adjusted 11.266 million open jobs at the end of the month, down a paltry 17,000 from January but a whopping 43.3 percent above year-ago levels. Industries with at least a million open jobs included retail, professional/business services, health care/social assistance, accommodation/food services, and government. Hiring increased by 263,000 during the month to 6.426 million (+11.0 percent versus February 2021). Nearly the same count of people departed their jobs as separations edged up by 48,000 to 6.092 million (+12.8 percent versus February 2021). Layoffs slipped by 17,000 to 1.386 million (-15.5 percent versus February 2021). Workers continued to leave their jobs of their own volition, with quits swelling by 94,000 to 4.352 million, up 26.5 percent from a year earlier.
Manufacturing activity held firm in March. The PMI, the headline index from the Institute for Supply Management’sManufacturing Report on Business, lost 1.5 points to 57.1. Even with the decline, the PMI has remained above a reading of 50.0—the threshold between a growing and shrinking manufacturing sector—for 22 consecutive months. Slowing from February were index components for new orders and production, while employment and inventory measures improved. Fifteen of 18 manufacturing industries expanded in March, led by apparel, furniture, and food/beverages.
Consumer confidence stabilized in March. The Conference Board’s Consumer Confidence Index added 1.5 points to a seasonally adjusted reading of 107.2 (1985=100). The gain may be fleeting, however. While the current conditions index jumped by 10.0 points to 153.0, the expectations index lost 4.2 points to 76.6. The press release blames both inflation and the Russian invasion of Ukraine for the darker outlook. 19.6 percent of survey respondents viewed current economic conditions as “good,” compared to 22.1 percent that sees them as “bad.” Consumers are far more sanguine about the labor market, as 57.2 percent of survey respondents indicated that jobs were “plentiful.”
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending March 26, 2022, First-Time Claims, seasonally adjusted): 202,000, -14,000 vs. the previous week, -527,000 vs. the same week a year earlier). 4-week moving average: 208,500 (-71.1% vs. the same week a year earlier).
- Gross Domestic Product (2021Q4—3rd Estimate, seasonally adjusted annualized rate): +6.9% vs. 2021Q3; 2021 growth: +5.7% vs. 2020.
- Construction Spending (February 2022, Value of Construction Put in Value, seasonally adjusted annualized rate): $1.696 trillion (+0.5% vs. January 2022; +11.2% vs. February 2021).
- FHFA House Price Index (January 2022, Purchase-Only Index, seasonally adjusted): +1.6% vs. December 2021 +18.2% vs. January 2021.
- S&P Case-Shiller Home Price Index (January 2022, National Index, seasonally adjusted): +1.6% vs. December 2021; +19.2% vs. January 2021.
- Agricultural Prices (February 2022, Prices Received by Farmers, not seasonally adjusted): +7.4% vs. January 2022; +25.6% vs. February 2021.
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What We Learned About the U.S. Economy Last Week 