- The US job market remained healthy in March…
- ...even with SA factors tamping down job growth…
- ….but trade wars & Powell’s pending talk dominate forward-looking risks
- Nonfarm payrolls, m/m 000s // UR %, SA, March:
- Actual: 228 / 4.2
- Scotia: 175 / 4.0
- Consensus: 140 / 4.1
- Prior: 117 / 4.1 (revised from 151 / 4.1)
The US economy generated 228,000 more payroll positions in March, beating all forecasts but with Scotia on the right side of consensus. Who cares. It’s an historical footnote on the economy that was before ruinous trade wars erupted.
Markets temporarily reversed some of the Treasury rally but yields are edging up again into Chair Powell’s speech on the outlook (11:25amET).
Chart 1 shows significant sector breadth. Services dominated at +197k.
Job growth could have been stronger if not for what I continue to believe to be unreliable seasonal adjustment factors. This March had the lowest SA factor on record when comparing like months of March over time (chart 2). At different SA factors that draw upon the whole range of March SA estimates, payrolls would have risen by even more (chart 3). There is a recency bias to how SA factors are calculated and they are skewed to the distortions of the pandemic and post-pandemic period.
Regarding weather effects on US jobs, I don’t see it being a big driver. I want to see the San Francisco Fed’s weather adjusted payrolls measure when they refresh it. We can't say to this point that weather was a lift factor for payrolls. I doubt there will be a big difference. As for the household survey, those unable to work due to bad weather fell back to 87k from 404k (chart 4). The figure is seasonally unadjusted though, and this March was about 50k lower than an average month of March which means it was a modest driver of the household survey’s job gain.
Government employment was up by 19k. Don’t get too used to that. The Federal Government’s payrolls were little changed (-4k) for the second consecutive small dip. State and local governments added 23k more workers as the offset. Firings in the federal civil service will show up in coming months.
Wage growth was 0.25% m/m SA. That equates to 3% m/m SAAR (chart 5). That’s neither here nor there, as it’s resilient, but not terribly warm.
Hours worked are tracking flat for Q1 at +0.3% q/q SAAR. That’s because hours tumbled in January to start the year, but they’ve since been mildly rebounding. All else equal, this is a weak indicator for Q1 GDP (chart 6).
The unemployment rate edged up because the household survey registered a 201k rise in employment that was slightly exceeded by a 232k rise in the labour force (chart 7). The labour force participation rate ticked up to 62.5% but is moving sideways (chart 8).
DISCLAIMER
This report has been prepared by Scotiabank Economics as a resource for the clients of Scotiabank. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Scotiabank nor any of its officers, directors, partners, employees or affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.
These reports are provided to you for informational purposes only. This report is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any financial instrument, nor shall this report be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The information contained in this report is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a “call to action” or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. Scotiabank may engage in transactions in a manner inconsistent with the views discussed this report and may have positions, or be in the process of acquiring or disposing of positions, referred to in this report.
Scotiabank, its affiliates and any of their respective officers, directors and employees may from time to time take positions in currencies, act as managers, co-managers or underwriters of a public offering or act as principals or agents, deal in, own or act as market makers or advisors, brokers or commercial and/or investment bankers in relation to securities or related derivatives. As a result of these actions, Scotiabank may receive remuneration. All Scotiabank products and services are subject to the terms of applicable agreements and local regulations. Officers, directors and employees of Scotiabank and its affiliates may serve as directors of corporations.
Any securities discussed in this report may not be suitable for all investors. Scotiabank recommends that investors independently evaluate any issuer and security discussed in this report, and consult with any advisors they deem necessary prior to making any investment.
This report and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced without the prior express written consent of Scotiabank.
™ Trademark of The Bank of Nova Scotia. Used under license, where applicable.
Scotiabank, together with “Global Banking and Markets”, is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including; Scotiabank Europe plc; Scotiabank (Ireland) Designated Activity Company; Scotiabank Inverlat S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Derivados S.A. de C.V. – all members of the Scotiabank group and authorized users of the Scotiabank mark. The Bank of Nova Scotia is incorporated in Canada with limited liability and is authorised and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia's regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank Europe plc is authorized by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and the UK Prudential Regulation Authority.
Scotiabank Inverlat, S.A., Scotia Inverlat Casa de Bolsa, S.A. de C.V, Grupo Financiero Scotiabank Inverlat, and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities.
Not all products and services are offered in all jurisdictions. Services described are available in jurisdictions where permitted by law.