At the beginning of each month, the markets turn their attention to the US payrolls report. The latest, delivered last Friday, was a disappointment. American firms created 120,000 new jobs in March, far below the 205,000 expected.
It was, in fact, the weakest rate of payroll formation since last October. Between December and February, an average of 246,000 jobs were created each month. The unemployment rate edged down to 8.2% from 8.3% in March – but that was largely because discouraged workers abandoned their search for employment.
It won’t be clear for some months whether America is “at the beginning of another downshift in job growth”, or merely suffered “an anomalous blip down in a better underlying trend” in March, says Jared Bernstein of the Center for Budget and Policy Priorities. “There’s some reason to hope for the latter,” but “we could be seeing the impact of higher [petrol] prices on growth, real incomes and consumption.“
It’s likely that unusually warm weather in winter will have boosted hiring and brought forward some of the gains into January and February’s data, making March seem poorer than it really was, says Capital Economics. Nevertheless, we should keep the bigger picture in mind. Recoveries after financial crises are slow and weak and “the rest of the world economy is stumbling”. The March jobs figure is “a reminder that the US recovery is not suddenly going to transform into a spectacular success”.