US: March employment report was a mixed bag - TDS

According to analysts at TD Securities, the US March employment report was a mixed bag as a solid 196k nonfarm payroll print (which beat market and our expectations, at 177k and 165k, respectively) was tempered by a disappointing 0.1% m/m increase in wages (0.145% unrounded).

Key Quotes

“Services sector employment led the rebound, jumping 184k in March on the back of job gains in education (70k), professional services (37k) and leisure and hospitality (33k). Employment in the goods sector partially recovered as construction jobs (+16k) appeared to have left behind a weather-induced drop in February. However, this gain was offset by a 6k decline in manufacturing employment which continued to underperform this month.”

“Modest upward revisions in the past two months, totaling 14k, also supported a decent take on the establishment report. Payroll growth is averaging 180k on three-month basis and 211k on a 12-month basis, which are still strong for this late stage of the cycle.”

“Slack measures were largely unchanged in the March report, with the unemployment rate holding steady at 3.8% and the U6 again at 7.3%, a cycle low. Slightly disappointing was the 0.2pp decline in the participation rate, which reversed improvement over the past three months.”

“Average weekly hours returned to 34.5 after a brief one-tenth dip in February.”

“The Fed was largely not going to react to today's report whether a grand slam or a triple play, but the ringing single for the March report should be good enough to keep the Fed in watch-and-wait mode.”