Terrible Jobs Report in March May Signal Shift in the Labor Market, or Simply a Correction

After a run of fantastic job reports for the U.S. economy in late 2014, the latest employment report from the Labor Department cemented what was a lackluster first quarter of 2015. In March, hiring bottomed out, with just 126,000 jobs added last month, and another 69,000 subtracted from previously reported totals in January and February. March was the slowest single month for job growth since 2013.

The unemployment rate stayed unchanged at 5.5 percent.

Economists had been expecting an increase of roughly double what was reported, in line with reports from previous months. There were sectors of the economy that did show strength: professional and business services added 40,000 jobs, retail gained 26,000, and healthcare added 22,000 workers.

But persistently low oil prices continued to take a toll on the mining sector, which includes oil and gas extraction. That sector lost 11,000 jobs in March and has lost a total of 30,000 so far this year. Government also lost 3,000 jobs while manufacturing and construction lost 1,000 each.

With the anemic report from March and the downward revisions for January and February, the first quarter of 2015 averaged just 197,000 new jobs per month, down sharply from the 324,000 average from the fourth quarter of 2014.

The lone bright spot in the March report was a 0.3 percent increase in wages, unexpectedly above the typical monthly rate of around 0.2 percent. Over the past 12 months, wages have grown 2.1 percent.

There were few excuses given by economists and analysts in business media for the poor report. There was mention of the protracted winter in the eastern U.S. that saw unseasonable cold and snow bleed well into March. One economist noted that the report could be somewhat anomalous and represent a “correction” from the blistering job growth of late 2014.

The labor force participation rate was little changed, still registering its lowest reading in decades: 62.7 percent. Americans not in the labor force against their will is reflected in the Labor Department’s U-6 measure of underemployment, which stood at 10.9 percent in March. Many economists call this rate the “real” unemployment rate.

ARM firms should take note that the epic turnaround in the labor market in 2014 hit a snag in the first quarter of this year. It remains to be seen if this is a blip or another slowdown in hiring.