The US economy printed a weaker than expected 192,000 increase in non farm payrolls for the month of March, lower than the estimated 200,000 gain in employment. Even though the February figure was revised up from 175,000 to 199,000, it was not enough to bring the jobless rate down from 6.7%.
Taking a look at the total number of Americans employed shows that the economy is back to its pre-recession levels in terms of employment. The January 2008 number was at 116 million and the March gains in hiring was enough to push the total to 116.1 million, reflecting strong progress in labor market recovery.
Non Farm Payrolls Breakdown
A closer look at the components of the latest jobs release shows that the construction sector added nearly 20,000 jobs for the month, indicating that the industry has recovered from the hiring slump induced by extreme weather conditions in the United States. Fed Chairperson Yellen has mentioned that the latest slack shown in the December 2013 and January 2014 figures were simply a result of the snowfall.
However, she also mentioned that other labor market indicators warrant much closer scrutiny. She has talked about the lack of progress in long-term employment and in the participation rate, although the March figures have indicated that more than half a million Americans returned to the labor force to look for full-time jobs.
Moving forward, dollar bias depends on the Fed’s assessment of the labor market data. While dollar bulls are focused on the improvements in the previous months’ figures and the increase in participation, dollar bears are zoning in on the flat average hourly wages and the steady jobless rate. The upcoming FOMC meeting minutes release should shed more light on which indicators really matter to the central bank when it comes to setting monetary policy.
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