Slow Job Growth in March after a Stellar February

by: , Managing Director, Economist, and Portfolio Manager, New York Life Investment Management

Employment growth disappointed in March, with a gain of only 103,000, well below the 185,000 new jobs expected by surveys of economists. At the same time, February job gains were revised up to +326,000, while January’s number was revised down from +239,000 to +176,000. Overall, the average for the last three months remains above 200,000 – a solid pace of job growth.

U.S. Employment – March 2018

Nonfarm Payrolls, 1,000 Persons

U.S. Employment - March 2018

Sources: Thomson Reuters Datastream, New York Life Investments, 4/6/18.

More importantly, average hourly wages were up 0.3% after a tepid gain of only 0.1% in February. Over the last 12 months, average hourly wages are up 2.7%. That is above the average for the last five years, but the pace of wage growth is still not breaking outside the recent range. Given the low level of unemployment, with the unemployment rate remaining steady at 4.1% (a 17-year low), it is surprising that wage growth has not yet broken into the 3%-4% range.

Average Hourly Earnings (April 2013 – March 2018)

Average Hourly Earnings - April 2018

Sources: Thomson Reuters Datastream, New York Life Investments, 4/6/18.

Blame It on the Weather

The weather may have been a factor in the slow job growth of March, given that snowstorms in the Northeast affected hiring, especially within construction and retail. Both of these sectors showed employment declines in March, after very large February gains. The strong gains in February may have been helped by unseasonably warm winter weather in that month.1

The Bottom Line

The headline number surely looks like a setback, but we are inclined to look through the noise, especially given the volatility caused by weather. The pace of job growth remains a solid +200,000, when viewed on average over the last three months. Meanwhile, wage gains picked up after a disappointing February, but the pace of wage growth has yet to break into the 3%-4% range. With unemployment low and a record number of businesses reporting that job openings are hard to fill2, we expect that to happen later this year.

1. Many cities, especially in the Northeast, reported record-high temperatures for February.

2. Source: NFIB Survey, 3/31/18.

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SAS Group, Strategic Asset Allocation & Solutions Group, is a division of New York Life Investment Investments. MainStay Investments® is a registered service mark and name under which New York Life Investment Management LLC does business. MainStay Investments, an indirect subsidiary of New York Life Insurance Company, New York, NY 10010, provides investment advisory products and services. NYLIFE Distributors LLC is located at 30 Hudson Street, Jersey City, NJ 07302. ALPS Distributors, Inc. is not affiliated with NYLIFE Distributors LLC. NYLIFE Distributors LLC is a Member FINRA/SIPC.


Poul Kristensen, CFA

Managing Director, Economist, and Portfolio Manager, New York Life Investment Management

Poul Kristensen, CFA is Managing Director, Economist, and Portfolio Manager with New York Life Investment Management’s Strategic Asset Allocation & Solutions (SAS) Group

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