Employment Supports June Fed Move

Economic Pulse
April 1, 2016
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Heidi Learner

Heidi Learner

Chief Economist

SUMMARY: Nonfarm payroll employment rose by 215,000 in March, with net revisions to January’s and February’s figures subtracting just 1,000 workers. While the household unemployment rate rose to 5.0%, the increase was largely due to growth in the participation rate, which reached a two-year high: the labor force grew by almost 400k, but the number of employed workers rose by just 246,000. (Note that the unemployment rate figures are based on a different survey from the nonfarm payroll count.)

Office employment in March rose by 49,000, below the average observed over the last 12 months (Table 1 and Chart 1). For the first quarter of 2016, office employment averaged 36,000—less than half of the 78,000 increase observed in Q4 2015—and does appear to be slowing. Nonetheless, the broader employment picture appears rosy, and measures of slack appear to be dissipating. As an example: the fraction of part-time workers working part-time for economic reasons (such as an inability to find full-time work) stood at 22% in March 2016, down 2.4 percentage points from a year earlier, and more than 11 percentage points lower than peak levels reached in the aftermath of the recession.

As shown on Chart 2, annual growth in total weekly earnings for all private sector workers was 2.0 percent in March 2016—in line with the 1.9 percent increase observed from March 2014 through March 2015. While the rate of wage growth by sector has been somewhat variable, there’s likely enough momentum for a June rate move by the Federal Reserve. An alternate measure of wage growth from the Atlanta Fed that looks at median, rather than average, wage growth, and includes all workers regardless of salary, shows that wages have risen by 3.2% in the year through February, near a 7-year high.



Heidi Learner

Heidi Learner

Ms. Learner analyzes the macroeconomic and legislative environment affecting commercial real estate markets on a national and regional basis and develops real-time measures of supply and demand for commercial space.