This morning, investors received some more encouraging news on the U.S. economy when the Department of Labor released its report on employment and unemployment for the month of March at 8:30 (EDT). Specifically, the report showed that the nation’s nonfarm payrolls increased by 192,000 last month and that job growth has averaged 183,000 per month over the last year. This comes on the heels of Wednesday’s report from payroll processing giant Automatic Data Processing (ADP) that the private sector had added a seasonally adjusted 191,000 jobs last month.
The latest government employment data are encouraging, especially when considering that unusually harsh winter weather for a sizable portion of the nation for the first two-plus months of 2014—a situation that no doubt had a negative impact on hiring. Still, nonfarm payrolls were upwardly revised for both January (from 129,000 to 144,000) and February (from 175,000 to 197,000). The jobless rate, which is more of a lagging indicator, held relatively steady at 6.7% last month. Details in the unemployment rate, though, could even be considered a bit of a positive development, as an upswing in hiring over the last two months brought more individuals back into the labor force.
Breaking the employment data down into its component parts, we learned that every industry—with the exception of the manufacturing sector, which shed 1,000 positions last month—added to payrolls, with the strongest gains coming in the professional and foodservice sectors. In addition to those areas, there were notable gains in the healthcare and construction industries. Meantime, employment in government, manufacturing, wholesale trade, and retail trade sectors was relatively unchanged in March. The lackluster retail and manufacturing figures were a bit surprising as the Institute for Supply Management, in separate reports this week, reported that manufacturing and nonmanufacturing (i.e., services) activity for the month of March expanded. Perhaps, we will see gains in those areas in the months ahead, as the aforementioned bad winter weather is even further in the rearview mirror.
All in all, the latest report on employment and unemployment is another positive development for the U.S. economy, and one more sign that GDP growth in the range of 3.0%—though not as strong as many economists would like at this stage of the economic up cycle—is very much achievable in 2014. - William Ferguson
The author did not have positions in any of the stocks mentioned at the writing of this article.