 | Non-farm payrolls increased 216,000 in March |
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Implications: The US labor market is clicking on almost all cylinders and we expect persistently solid payroll growth, month after month, for the foreseeable future. Including upward revisions to prior months, non-farm payrolls increased 223,000 while private sector payrolls jumped 274,000. This strength was confirmed by figures on civilian employment – an alternative measure of jobs that is better at picking up the self-employed and small start-up businesses – which increased 291,000. The increase in jobs pushed down the unemployment rate to 8.8%, the lowest in two years. The "soft" part of the report was that average hourly earnings were unchanged in March. However, these earnings are up 1.7% versus a year ago while total hours worked are up 2.1%. As a result, total cash earnings by workers are up 3.8% in the past year. So far, this is more than enough for workers, as a whole, to keep up with inflation. More timely news on the labor market shows further progress. New claims for unemployment insurance declined 6,000 last week to 388,000. Continuing claims for regular state benefits dropped 51,000 to 3.71 million. News like this is behind the recent increase in "hawkish" comments from Federal Reserve officials. The breadth of the comments suggests some degree of coordination. We believe the Fed wants to make it crystal clear to the financial markets that a third round of quantitative easing is highly unlikely.
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