The labor markets started slowing in March. The United States created 126,000 jobs, announced on Friday April 3rd, the Department of Labor. To find out exactly where such a low figure could originate, one would have to observe what was going on back in the December of 2013. Although the unemployment rate remained unchanged at 5.5%, it had a real drop, which caught the attention of economists, who had forecast the creation of 265,000 jobs.
Throughout the first quarter, the average monthly job creation rates thus fallen have fallen to 197,000, compared at 324,000 in the fourth quarter of 2014. This puts an end to a series of twelve consecutive months during which the US economy created more than 200,000 jobs monthly. So what got in the way of progress? What halted this march towards what seemed like an unbeatable system? This slower pace in job creation has been noticed in the US and is due to the fact that the industries of construction and oil have reduced their hiring.
In these industries, this is the first decline since July 2013, while the energy sector lost 11,000 jobs in March and nearly 30,000 since the beginning of the year. The leisure, hotel, catering, wholesale industries failed to offset these losses. This month marks the worst it’s had in hiring since September 2014.
As for wages, the trend is still disappointing. The average hourly wage increased by only 0.3% in March from February. The increase over the year is only 2.1%, in line with the pace of the past five years. The low unemployment rate does not always result in pressuring employers to raise wages. One explanation is the low participation rate, meaning there’s plenty of Americans who don’t have jobs and who whether or not they’re actually looking for a new one. This so called participation rate fell to its lowest level since 1978, to 62, 7%.
Nevertheless, unemployment in the broad sense, that is to say, including part-time suffered, fell 0.1 points to 10.9%. “Some may cry wolf on weak jobs data [in March], but it is a simple realignment with the true underlying pace of economic growth, which is around 2.5%. What is more worrying is that wages are still much harmed by progress,” said Gregory Daco, economist at Oxford Economics.
These employment figures are published in the wake of a battery of disappointing indicators whether industrial production, retail sales or housing starts. Although consumer confidence remains high, these figures confirm that the pace of recovery has slowed in the first three months of the year. Most economists have downgraded their growth forecasts. It should not exceed 1.5% in the first quarter, against 5% in the third quarter 2014 and 2.2% in the fourth.
Although the president of the Federal Reserve Janet Yellen provided March 18th a “good performance of the economy” throughout the year, the situation is actually mixed and has much contention in the final say. A report by the AARP Policy Institute, published a few days ago, pointing that the long-term unemployment for over 55 years was 45% of job seekers. On Thursday, the Labor Department reported that the average income of 80% of the least wealthy Americans fell by 0.9% in 2014 compared to the previous year. This is the second consecutive year that this figure lags downturn. If the recovery is there, it is still as unequal.