The Great Recession of 2008 spun the labor market into one of the most distressing phases in American history. With job losses soaring, unemployment increased to near post-war highs. Since then, labor market recovery has been sluggish, often indicating a disappointing economic landscape. This month, we discuss five notable commentaries that address the March jobs report – the most unfavorable in over a year.
1. Allianz: Is the March Jobs Report a Game Changer? – Kristina Hooper breaks down key points from the March jobs report, and suggests that the severe drop in oil prices and strong dollar have negatively influenced job growth. Allianz notes that construction jobs in particular have floundered, and long-term unemployment remains a concern. Although employment figures currently exhibit slow progress, there was a significant drop in initial jobless claims in the week ending March 28, along with increased wage growth by .3%. Allianz predicts that the drastic drop in newly created jobs will not influence the Fed’s monetary policy plans.
2. Lord Abbett: U.S. Labor: A Not-So-Great Participation Rate – In this commentary, Milton Ezrati examines possible long-term effects on the economy due to the declining participation rate of Americans in the labor force, along with the implications on Federal policy. Lord Abbett details opposing views about why eligible workers are becoming increasingly less active in the labor force. Some analysts argue the fall-off is caused by discouraged job seekers who are intimidated by a poor job market. Other theorists believe the problem is demographically rooted, citing the aging population as the main factor. Although a high unemployment rate may foster doubt among market participants and in turn increase volatility, Ezrati suggests it will not cause policy makers to reverse their plans for pending monetary policy change.
3. Federated: Orlando’s Outlook: March Jobs Report Lays a Giant Easter Egg – Philip J. Orlando summarizes the dismal details of the March jobs report. Nonfarm payrolls grew by 126K jobs in March, which was way below the 245K predicted by Bloomberg. Private payroll performance was weak, while construction and manufacturing jobs turned negative. Although wages rose and unemployment remained static, the amount of hours worked in the average private work week lowered. On a positive note, initial weekly jobless claims fell toward the tail-end of the month. Due to the lackluster jobs report, Federated predicts that the Fed will push back its plan for rate hikes to September, instead of June as previously anticipated.
4. OppenheimerFunds: It Ain’t Just the Weather – In this commentary, CIO Krishna Memani weighs in on the March jobs report, refuting the widespread notion that the low job growth rate is highly attributed to poor weather. Instead, Oppenheimer suggests that more significant catalysts include the dollar’s surge, a deleveraging landscape and the slow U.S. economy. The firm predicts that these disappointing figures do not signal a trend, keeping policy makers on track to raise rates this year. Oppenheimer also predicts that credit bonds will thrive over government bonds, and recommends global equities over U.S. equities for investing.
5. AB Global: Labor Markets Still Strong Despite Disappointing March Job Gains – This commentary suggests that poor job gains in March do not invalidate an optimistic outlook for labor markets, citing several promising figures and a breakdown of how job gains and losses are calculated by the BLS. For example, although the hiring rate fell severely below projections, civilian unemployment remained at its current 5.5%. Alliance Bernstein predicts that future revisions to the March numbers are likely, and suggests that weather-related disruptions, falling energy prices and the West Coast port strike played influential roles in obstructing overall job growth. AB notes improved wage gains signal some strengthening of the labor markets, which may influence policy makers during the Fed’s June meeting.