A temporary slowing?

Photographer: Paul J. Richards/AFP/Getty Images

Eight Takeaways From the March Jobs Report

Mohamed A. El-Erian is a Bloomberg View columnist. He is the chief economic adviser at Allianz SE and chairman of the President’s Global Development Council, and he was chief executive and co-chief investment officer of Pimco. His books include “The Only Game in Town: Central Banks, Instability and Avoiding the Next Collapse.”
Read More.
a | A

Here are the eight quick things to know about the jobs report released today:

 The U.S. employment machine notably lost momentum in March, with just 126,000 new jobs added -- far fewer than the consensus expectation of around 250,000 -- and with revisions erasing 69,000 from the previous two months’ total,  according to the Labor Department. The lackluster result ends an impressive 12-month run of job gains in excess of 200,000.

The sectoral composition of the job gains and losses indicates that weather disruptions and international headwinds contributed to the disappointing number. Together, those forces countered what is still weak structural U.S. growth momentum.

The most widely followed measure of unemployment, the U-3 rate, was unchanged at 5.5 percent. As such, it remains above the 5 percent to 5.2 percent level that the Federal Reserve is said to regard as the policy-relevant NAIRU, or non-accelerating inflation rate of unemployment. The more comprehensive U-6 measure fell slightly, to 10.9 percent, its lowest since August 2008, just before the eruption of the global financial crisis.

The number of people classified as long-term unemployed was essentially unchanged, at 2.6 million, or 29.8 percent of the total, providing further evidence of the structural challenges facing the U.S.

Having vastly lagged the types of gains that could be expected on the basis of historical models, wage growth edged slightly higher in March. With a gain of 7 cents an hour for March, the annual increase in average hourly earnings now amounts to 2.1 percent. Any positive impact on consumption, however, was offset by the slight decline fall in the average workweek.

The general improvement in the jobs picture conceals still stark, though generally narrowing internal divergences. The unemployment rate for blacks stands at 10.1 percent, compared with 4.7 percent for whites. And, at 8.6 percent, the jobless rate for those without a high school diploma far exceeds the 2.5 percent level for people with a Bachelor's degree and higher.

Equity markets in the U.S. were closed for Good Friday, and it was left to the bond and foreign- exchange markets to signal the financial sector’s assessment of the report. With yields declining and the dollar weakening, they point to downward revisions in growth assessments and the expectation of a delay of the first interest rate increase by the Federal Reserve.

The report is a further reminder of how much more the U.S. economy could -- and should -- achieve if it weren't for political dysfunction in Washington and a “do little” Congress that preclude more comprehensive structural reforms, infrastructure spending and a more responsive fiscal policy.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Mohamed A. El-Erian at melerian@bloomberg.net

To contact the editor on this story:
Max Berley at mberley@bloomberg.net