Recession False Alarm The job market shows underlying strength after February’s scare.
https://www.wsj.com/articles/recession-false-alarm-11554506440
Friday’s solid labor report ought to ease fears that the U.S. economy is skidding toward recession. Employers added a healthy 196,000 jobs in March while unemployment held at 3.8%, confirming that the labor market continues to expand following a freeze in February and should continue despite economic problems abroad.
Job growth has averaged 180,000 for the last three months, which is down from 223,000 in 2018, but still strong for an economic expansion that’s going on a decade. Average hourly earnings climbed 3.2% in March and have moderated over the past few months, which suggests rising wages are unlikely to push up prices and fuel wage-push inflation.
Labor-force participation dipped to 63% from 63.2% in February and is virtually unchanged from a year ago despite countervailing demographic trends from an aging workforce. It’s also a good sign that the number of workers employed part time because they can’t find full-time jobs has continued to drop and declined 170,000 over the past three months.
Employment growth was strongest in health care (49,000), professional business and technical services (34,000) and food services (27,000). Retail shed 11,700 jobs, mostly in supercenters and drugstores. Some of these job losses may be due to the Sears bankruptcy that is still shaking out. Walgreens and CVS also recently reported slowing growth amid reduced drug payments, but job losses at pharmacies may be offset by gains in health care.
Manufacturing also lost 7,000 jobs including 6,300 in motor vehicles last month. But domestic auto sales bounced back in March after a slow start to the year and the Institute for Supply Management’s manufacturing index ticked up to 55.3 from 54.2 in February. Trade uncertainty and slowing growth abroad are hammering exports, which is why a trade deal with China that reduces tariffs is the top policy priority for 2019.
Some market soothsayers warned that an inversion of the Treasury yield curve last week and a manufacturing slowdown augured a recession. But the jobs report suggests these are false alarms. While growth has cooled, neither recession nor runaway inflation appear imminent, which reaffirms the Federal Reserve’s decision to stay its interest-rate course.
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