On the March Jobs Report

The March jobs report showed a surprising divergence between the two Labor Department surveys, the survey of households and the survey of firms. Good news from households: their unemployment rate declined to 4.5%. Most important, it did so without a decline in the share of Americans working or looking for work, known as labor force participation rate, which stayed the same. The broadest measure of labor underutilization, U-6, fell below 9 percent for the first time since the Great Recession.

Bad news from the payroll survey, which reports jobs added by companies. This is a survey of jobs, not people. One person can be employed, but have two jobs, so would count as two jobs in the payroll survey but one person employed. Only 89,000 private sector jobs were added (98,000 payroll jobs, including government workers), far below expected levels of 200,000. In addition, job creation numbers over the past two months were revised down by 38,000 and the average workweek shrank. One silver lining in the cloud: earnings went up as jobs in low-paying retail declined, and in higher-paying professional services rose.

This divergence sometimes occurs because the data come from two different surveys. From other data on economic activity, such as factory orders, it is likely that the payroll survey, which will be revised over the next two months as more data come in, is temporarily out of line with the household survey. But no one knows for sure. Meanwhile, Congress and President Trump need to push ahead with tax and regulatory reform to give employers the certainty to ramp up hiring.

Diana Furchtgott-Roth is a senior fellow and director of Economics21 at the Manhattan Institute. Follow her on Twitter here.

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