Highlights
Non-farm payrolls rose only 110,000 in March, below the rate of population growth and far below expectations. The disappointment included a net 27,000 downward revision to February and January.

The data point to a new rally in bonds, new selling in the dollar, and more sideways inaction for stocks as the negative effects of a weaker labor market are balanced against an easing threat of higher interest rates.

A look at quarterly rates of non-farm payroll growth shows the trouble. Monthly payroll growth averaged 159,000 in the first quarter, soft and below the fourth-quarter average of 190,000. Economic growth, even if it's not strengthening, remains very strong -- but so does productivity growth which continues to cut into the need for employers to add more workers.

Wage growth, however, remains moderate. Average hourly earnings did jump 0.3% in March vs. a 0.1% rise in February, but the year-on-year rate of 2.6% remains no higher than the rate of inflation nor the rate of productivity. The earnings uptick is likely to limit gains in bonds but is unlikely to spark worries over wage-push inflation.

There was no sign from the hours data that employers are straining their workforces. The average workweek was unchanged at 33.7 hours while manufacturing hours dipped 6 minutes to 40.5.

Manufacturing, which ended a long contraction streak in February with a big gain (cut down by 5,000 to 15,000 in today's revision), reverted to the old trend -- falling 8,000 in one of the many disappointments of the report. Retail trade payrolls fell 10,000, motor vehicle & parts were down 5,000, and temporary help services, which is often considered a leading category of employer intentions, fell 4,000.

A look at the household data, from which the nation's unemployment rate is computed, is more positive. The labor force rose slightly, now up for two months and perhaps suggesting discouraged workers are returning to the labor force. Gains in those employed outdid gains in the unemployed, resulting in a 2 tenths downtick in the unemployment rate to 5.2%.

But the employment-to-population ratio, a reading that strips out changes in the labor force, rose only a fraction, up a tenth to a still weak 62.4%.

Administration officials are likely to grab on to the unemployment rate as a signal of economic health, and perhaps the rate may limit the effect of the day's report on the financial markets. But concern over an upshift in Federal Reserve tightening -- raised with the last FOMC statement and its warning on inflation -- is certain to quiet down.

2005 Release Schedule

Released On: 1/7 2/4 3/4 4/1 5/6 6/3 7/8 8/5 9/2 10/7 11/4 12/2 Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov