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Payrolls and Earnings Leap, but Unemployment Rate Holds Steady

Plus, the jobs report's compilers point out that special factors accounted for much of the payrolls growth.

On balance, the March

employment report matched expectations closely enough to be considered something of a yawner.

True, the report's most important component -- the number of new nonfarm jobs created -- exceeded the consensus forecast. Nonfarm payrolls expanded by 416,000 in March, the

Bureau of Labor Statistics

said, vs. an average forecast of economists surveyed by

Reuters

for a 376,000 gain.

But that's not too wide a miss, and the BLS took pains to point out that about 117,000 of the new jobs were temporary

Census

worker positions. And that an unusual

technical factor -- five weeks between the February and March survey periods -- also inflated the March number.

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The 117,000 Census workers helped boost total government employment by 142,000. That compares with an average gain over the previous 12 months of 28,000.

But private employment also grew at an above-trend pace. Private payrolls added 274,000 new jobs. Over the previous 12 months, they added an average of 186,000.

Construction also showed an unusual degree of strength, owing largely to the five-week gap between the survey periods, the BLS said. Construction payrolls grew by 89,000, vs. an average of 21,000 over the previous 12 months.

Manufacturing remained weak, though, losing 5,000 jobs. The sector has lost an average of 12,000 jobs a month over the past 12 months.

Perhaps the worst news in the March jobs report from a markets perspective was the average hourly earnings data. Average hourly earnings rose 5 cents to $13.60, a 0.4% increase. The average forecast was for a 0.3% gain. Rising wages and salaries indicate that labor-market tightness is forcing employers to pay up for help. That's wage inflation, and price inflation is usually on its heels.

Moreover, the February gain in average hourly earnings was revised to 0.4% from 0.3%.

The impact of those increases was blunted, however, by the fact that the long-term trend in average hourly earnings remains tame. The year-on-year pace of growth actually slowed in March, to 3.7% from 3.8%.

Also cooling the markets' temper over payrolls, the unemployment rate as measured by the jobs report held steady at 4.1%. The average forecast saw it dropping to 4.0%, and some economists predicted it would crack that level for the first time in 30 years.

Finally, a more obscure measure that

Fed Chairman

Alan Greenspan has recently embraced -- the

augmented unemployment rate -- also held steady at 7.0%. The augmented unemployment rate takes into account not just the officially unemployed but also people who want jobs but who aren't counted among the officially unemployed because they haven't looked for a job in the past four weeks. That group, the so-called pool of available workers, swelled to 10.3 million in March from 10.2 million in February.