The labor market continues to create jobs, albeit at a slower pace. Here are the five things we learned from U.S. economic data released during the week ending April 7.
Job growth slowed in March. Nonfarm payrolls expanded by a seasonally adjusted 236,000 in March, down from gains in January and February of 472,000 and 326,000, respectively. The Bureau of Labor Statistics indicates that private-sector employers added 189,000 workers (down from 266,000 in February), split between a 196,000 rise in the service sector and a 7,000 decline for the goods-producing side of the economy. Industries adding the most workers were leisure/hospitality (+72,000), health care/social assistance (+50,800), and professional/business services (+39,000). Government employers expanded their payrolls by 47,000. Weekly average earnings of $1,141.39 were up 3.3 percent from a year earlier.
The separate household survey lowered the unemployment rate by 1/10th of a percentage point to 3.5 percent. The economy saw the labor force expand by 480,000, with the labor force participation rate adding 1/10th of a percentage point to 62.6 percent. The 25-54 labor force participation rate held steady at 83.1 percent. The median length of unemployment fell 2/10ths of a week to 8.1 weeks, while the count of part-timers seeking full-time work eked out a 35,000 increase to 4.102 million. The broadest measure of labor underutilization slipped by 1/10th of a percentage point to 6.7 percent.
There were fewer open jobs in February. There were a seasonally adjusted 9.931 million nonfarm open positions at the end of February, down 632,000 for the month and 14.4 percent from a year earlier. The Bureau of Labor Statistics measure has not been this low since May 2021. The private sector was responsible for 8.937 million open jobs, with professional/business services, health care/social assistance, and leisure/hospitality having over a million available opportunities. Hiring slowed in February, dropping by 164,000 to 6.163 million (-9.4 percent versus February 2022). 5.820 million people left their jobs during the month, down 80,000 from January and 4.1 percent from a year earlier. 4.024 million people quit their jobs in February (up 146,000 for the month), while layoffs slowed by 215,000 to 1.504 million. Quits and layoffs were down 6.7 percent and 5.7 percent, respectively, from a year earlier.
Purchasing managers report that the manufacturing sector shrank again in March. The Manufacturing PMI lost 1.4 points to a reading of 46.3. The Institute for Supply Management measure has been below a reading of 50.0—indicative of a contracting manufacturing sector—for five straight months. PMI components fell for new orders, production, employment, and inventories. Six of 18 manufacturing industries grew in March, led by printing, fabricated metal products, and petroleum/coal products. The other 12 contracted, with the biggest declines reported for furniture, nonmetallic mineral products, and textiles.
They also indicate feeble service sector growth. The ISM’s Services PMI shed 3.9 points in March to a reading of 51.2. The measure has remained above 50.0 for 33 of the past 34 months. Falling were measures for business activity/production, new orders, and employment. The inventories index improved during the month. Thirteen of 18 service sector industries expanded, led by arts/entertainment, education, and accommodation/food services. Among the five contracting service sector industries were finance/insurance, wholesale trade, and real estate. The press release noted that most survey respondents “report a positive outlook on business conditions.”
The trade deficit grew as activity slowed in February. The Census Bureau and the Bureau of Economic Analysis report that exports declined 2.7 percent to $251.2 billion and imports decreased 1.5 percent to $321.7 billion. The resulting trade deficit of -$70.5 billion was up 2.7 percent from January. The goods deficit swelled by $2.7 billion to -$93.0 billion and the service surplus grew by $0.8 billion to +$22.4 billion. The former resulted from declines in exported natural gas, passenger cars, pharmaceuticals, and civilian aircraft and fewer imports of cell phones, passenger cars, and trucks/buses. The U.S. had its largest services deficits with China, the European Union, Mexico, and Vietnam.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending April 1, 2023, First-Time Claims, seasonally adjusted): 228,000, -18,000 vs. the previous week, -14,000 vs. the same week a year earlier). 4-week moving average: 198,250 (+10.8% vs. the same week a year earlier).
- Vehicle Sales (March 2023, Light Trucks and Automobiles, seasonally adjusted annualized rate): 14.816 million (-1.2% vs. February 2023; +9.3% vs. March 2022).
- Construction Spending (February 2023, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.844 trillion (-0.1% vs. January 2023; +5.2% vs. February 2022).
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What We Learned About the U.S. Economy Last Week 