The unemployment rate fell to 4.5 percent in March, its lowest level since May of 2007. The employment-to-population ratio also edged up to 60.1 percent, a new high for the recovery, but still more than 3.0 percentage points below its pre-recession level.
However, the good news on the household survey was accompanied by weak job growth in the establishment survey. The economy added just 98,000 jobs in March. Job growth was also revised downward by 38,000 for the prior two months, bringing the three-month average to 178,000. There also has been some shortening of the average workweek. The index of aggregate weekly hours is unchanged from its January level.
The strongest areas of job growth were restaurants (21,700), building support services (16,800), and health care (13,500). Mining also added 11,000 jobs, as did manufacturing. Retail was a big job loser in the month, shedding 29,700 jobs. This sector is likely to continue to show weakness as several major chains have announced plans to close a large number of stores.
Wage growth appears to be slowing slightly. While the year-over-year increase in the average hourly wage was 2.7 percent, wages have grown at just 2.4 percent comparing the average of the last three months to the prior three months. This should give pause to those concerned about the labor market being too strong. The fall in the length of the work week, coupled with modest wage growth, indicates there is much room for further strengthening.