The online WSJ is back with a another wonderful round up of Economists’s reactions; (See if you can pick out which ones are in hip to the real underlying economic doings):
Employers added 110,000 jobs to U.S. nonfarm payrolls last
month, the Labor Department reported Friday, a gain that was about 50% short of
the gains that most Wall Street economists expected. At the same time, the
unemployment rate dipped to 5.2% from 5.4%. What happened? Below, a selection of
economists offer analysis of the numbers, and what they expect them to mean for
the broader economy in the weeks and months ahead:
* * *
Reported payroll growth is volatile month to month, but
the results of the March report and the increase in jobless claims since the
week of the survey indicate that business has slowed down hiring recently,
probably in response to much higher energy prices. At the same time, the decline
in the average unemployment rate in the first quarter is a reminder that recent
job growth, while less than expected, is large enough to allow the unemployment
rate to drift lower.
– Bethany Baldino, J.P. Morgan
This weaker than expected outcome, reinforced by weakness
in hours, indicates that the economy is continuing to meet is production needs
with stronger productivity. … Strong productivity growth will continue to
restrain inflation. The contradictory performance of the two key employment
surveys could deprive the Fed of the confidence it would need to alter its
current pace of adjusting policy.
– David H. Resler and Gerald
Zukowski, Nomura Securities International
In contrast to some past reports, weather-related factors
do not appear to have played a major role in March. Construction jobs rose
26,000 — right in line with the underlying trend experienced over the past year
or so. Moreover, the "not at work due to bad weather" component of the household
survey came in at 170,000 only slightly above the March average of 150,000 seen
over the prior three years.
– David Greenlaw and Ted Wieseman, Morgan
Hourly earnings are having trouble gaining traction,
suggesting that labor markets are not particularly tight. Faster job creation is
necessary to generate the faster earnings growth that is needed to sustain real
consumer spending. However, businesses still remain cautious, evidenced by a
steady workweek at a relatively short level. Total hours worked in Q1 are only
moderately above Q4′s level, indicating that labor productivity accelerated in
– Steven Wood, Insight Economics
Wage gains picked up a bit, helping push up weekly
earnings. But before we start thinking wage inflation is accelerating we need to
see a few more months of 0.3% increases before anyone, including the Fed, would
get really worried.
– Joel L. Naroff, Naroff Economic Advisers
This is disappointing but it does not change the
underlying picture of an improving labor market. … Note that the drop in the
unemployment rate appears "genuine," in the sense that the 332,000 drop in
unemployment was exceeded by the 357,000 rise in employment; in other words, the
drop in the unemployment rate was not because people dropped out of the labor
– Ian Shepherdson, High Frequency Economics
As always, interesting stuff.
April 1, 2005 12:45 p.m.
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