Apr 8, 201502:46 PMOpen Mic
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Market and economic update: Unemployment remains low despite lower-than-expected payroll gains
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Softer-than-expected U.S. economic data have finally hit the employment market, as evidenced by the March nonfarm payrolls gaining only half of what the market expected. Payrolls grew by just 126,000 jobs and prior months saw downward revisions, with the primary decline being felt in the mining and logging sector, which also includes employees in the oil industry.
So far in 2015, payroll declines in this industry group have reversed almost 70% of the job gains the industry saw in 2014. Our view is this report likely reflects weather-related issues, as well as some impact from the West Coast dockworkers’ strike.
The unemployment rate remains low, and weekly initial jobless claims have averaged fewer than 300,000 per week for the first quarter, which is the lowest level in 15 years, indicating the jobs market likely remains quite healthy and should support further growth in consumer spending. Also, a small positive in this report was the 0.3% gain in average hourly earnings for production and nonsupervisory workers, which may indicate wage gains could see some modest lift over the rest of the year.
One concern in the U.S. market is softness in consumer spending growth, despite solid gains in personal income. The domestic savings rate is higher at 5.8%, the highest level since late 2012. For now, we believe consumers are skeptical that energy prices will remain low and are saving some of their windfall from lower oil prices.