Nonfarm Employment Report: Labor Market Recovers Recession’s Lost Jobs

It took four years, but the U.S. labor market has nearly recovered all the jobs lost during the housing recession (see chart below).  Last week’s employment data showed March nonfarm payrolls grew by 192K, February’s data was revised up 22K to 197K from 175K, and January’s data was revised up 15K to 144K.  If we take into account the last two months’ revisions, then March’s jobs growth was a solid +200K, which is back on track with the end of 2013.  Long-term unemployment remains elevated at 3.7M, but is down 837K year over year.  The Household Survey data revealed a flat unemployment rate versus last month at 6.7%, due to a 0.2% rise in the participation rate to 63.2% and an unchanged total number of unemployed persons.  Labor participation seems to have found its nadir from generational lows.  The average workweek increased 0.2 hours to 34.5 hours, which reverses declines seen over the last three months. Finally, and somewhat disappointing, was the penny drop in average hourly earnings to $24.30.  All in all, the report supports our thesis that first-quarter events were transitory and our outlook for moderate economic growth, less extraordinary measures by the Federal Reserve and a mild rise in interest rates by year end, remains intact.