Why the Good News-Bad News Jobs Report Is a Bust

NEW YORK (TheStreet) -- The March jobs report is a mixed, somewhat discouraging bag. It wasn't bad. But it wasn't the 250,000 jobs hoped for either.

The pluses: The economy added 37,000 more jobs than we thought in January and February, the mix of new jobs wasn't bad with the crucial construction sector picking up, and employers were asking their people to work more hours -- usually a sign they eventually will need to hire more.  

The minuses: Wages didn't do much. The 192,000 jobs added missed the average forecast of 206,000 and was well short of the 250,000 the most bullish economists had thought was possible.

Some key points to think about, on the plus side.

Construction added 19,000 jobs. The single biggest gap in the recovery remains the tepid pace of construction, especially in housing, now that manufacturing output is back above pre-recession peaks. Construction has now added 151,000 jobs in the last year, putting a dent in the 1.8 million-job deficit between 2006 construction employment and what we have now.

Manufacturing did okay, shedding 1,000 jobs. The plus was that the average work week in factories rose to 42 hours, a sign that hiring pressures are imminent. 

The drain from government employment was only 1,000 jobs because as hiring by state and local governments nearly offset the 9,000 lost federal jobs. Part of the case for stronger growth in mid-2014 is less interference from federal budget cuts, which are smaller this year than in the last two.

The number of discouraged workers fell to 698,000, down 105,000 in the last year and 57,000 from just last month. It's a sign that people are believing in the economy again. Work force participation also ticked up by 0.2 percentage points, to 63.2%, getting back to levels from four months ago.

Most of the drop in participation since 2007 has been about Baby Boomers retiring, and this month's climb was either statistical noise or the beginning of some sidelined workers deciding to begin looking for work again. How many ultimately will, we don't know yet.

Now for the negatives.

No real movement on wages. There are signs that wages are moving in certain industries and certain regions, but the overall economy is so big, and has enough slack, that wages for all workers combined are not moving much yet. Average hourly earnings dropped by a penny to $24.30, offsetting part of last month's 9 cent gain. Wages are up 2.1% in the last year.

Remember, new Federal Reserve Chair Janet Yellen has made a point of emphasizing wage growth as a guide to monetary policy in her few weeks on the job. The bank is not getting a raise (higher interest rates) before workers get a bump in their wages.

The number of workers working part time for economic reasons rose by 225,000, reversing part of a decline of 660,000 the last two months. This piece of the puzzle -- another point of emphasis for Yellen -- is now not improving as fast as it looked like it was. In fairness, it was improving very rapidly the last two months, and is still much stronger than in December.

The number isn't the big blowout some economists have been predicting, and unemployment remained at 6.7% of the work force. Tha Big Bang number going to have to wait, for at least another month.

Bottom line: The economy is still getting better, and still slowly enough to be maddening. The headline keeps the Fed dovish -- it was going to do that anyway, Yellen has made clear. And the goal of sub-6 percent unemployment -- still possible by late fall if things go well -- didn't get much closer. 


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