United States

March payroll report reveals the shape of things to come


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The labor market has been on fire lately, growing at a pace of 211,100 over the past six months, a rate that is simply unsustainable given the tight labor market. While last week’s nonfarm payroll report showed U.S. hiring slowed to a net change in total employment of just 103,000 in March, the Bureau of Labor Statistics (BLS) shaved 50,000 jobs from the monthly tally. The BLS often underestimates gains in the early stages of business cycles and then overestimates monthly changes as the business cycle comes to a close. From that standpoint, the March data is simply a foreshadowing of things to come as the U.S. business cycle enters its latter phase.

Seasonal issues aside, we should prepare for more employment reports such as the tepid March estimate. Keep in mind the economy only needs to generate about 80,000 new jobs per month to keep the unemployment rate stable. With the unemployment rate at 4.1 percent (4.071 percent) even the modest gain of 103,000 new jobs is sufficient to put downward pressure on it.

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