US job growth misses forecasts by wide margin in March

Alexander Bueso WebFG News | 03 Apr, 2015 13:38 - Updated: 16:13 | | |

Oil & gas workers, drilling, energy

The rate of job creation in the US slowed down sharply from the blistering pace seen since last summer, which may lead the Fed to delay its first increase in interest rates.

US non-farm payrolls expanded by 126,000 in March, following a downwardly revised increase of 264,000 in February, for the smallest increase since December 2013.

The consensus estimate had been for a gain of 245,000.

The rate of growth in non-farm payrolls over the previous two months was revised lower by a combined -69,000, according to data from the Bureau of Labor Statistics (BLS).

Mining lost another 11,000 jobs this month, accounting for the bulk of the 13,000 positions lost in the goods sector, while payrolls in the services sector increased by 142,000, down sharply from the previous month's gain of 244,000.

Hiring in leisure and hospitality ran at a 13,000 pace in March versus the 70,000 people taken on by the sector in February.

The unemployment rate remained unchanged at 5.5%, as expected.

On a slightly positive note, average hourly earnings increased by 0.3% month-on-month and were 2.1% higher than a year ago.

Analysts had been expecting wages to rise by 0.2% over the month and by 2% in terms of year-on-year growth.

The length of the average work week ticked lower to 34.5 hours from 34.6 in February.

"The labour market is not imploding."

Weather may have played a hand, strategists say

For market strategist Bill Hubard part of the weakness seen in the March non-farm payrolls figures was attributable to the lagged effect of recent adverse weather on the data. His forecast had been for an increase of 195,000 in March's payrolls.

In a research report sent to clients following the jobs release, Paul Ashworth, chief US economist at Capital Economics, indicated that the timing of the first interest rate increase by the US Federal Reserve might be delayed until September. That was especially so given the slowdown in GDP. However, he emphasised the volatility which is typical of the monthly jobs reports. Furthermore, "all the other labour market indicators that we track point suggest that labour market conditions are still very strong," he said.

"Payrolls are always volatile even at the best of times and we are coming off a run of almost unbelievably strong employment growth stretching back to last summer," Ashworth added.

"The labour market is not imploding."

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