Warm reception for the improvement in the March jobs report, and Dow Indutrials surge to a 2011 high. Good to see 216,000 jobs added, unemployment rate down a tick, but the report wasn’t without its flaws.
Labor force participation remains stuck at a low 64.2%, until recently a level last seen in 1982. Average hourly earnings for private employers actually fell 2c to $19.30 (though weekly pay ticked up). The number of long-term unemployed (out of work more than six months) rose, and now accounts for 45.5% of 13.5M out of work.
The stagnant wages may be the biggest drawback to this report. As Paul Ashworth at Capital Economics notes, job growth still isn’t strong enough to bring the unemployment rate down quickly, and if it only drops 0.1% per month, as it did in March, “it would take another three and a half years to get back down to the pre-recession level.” The still-high rate continues to tamp down wage inflation, with overall average hourly earnings flat for second-straight month, and annual growth rate remained at 1.7%, Ashworth points out. “In real terms, wages are falling.”
There was also a drop in the U-6 measure of underemployment, looks as if there’s fewer “discouraged” workers out there. However, based on the participation rate, it doesn’t look as if they all went from discouraged to back in the labor force, so it makes you wonder how many are just slipping off the radar screen altogether.