Job Creation Craters, But Unemployment Rate Surprisingly Holds Steady At 5.5%

The Labor Department reported Friday that U.S. job creation cratered in March adding just 126,000 to nonfarm payrolls, while unemployment remained at 5.5 percent. The labor force participation rate, employment-to-population ratio and wages, all barely moved from their abysmal readings.

The government also announced sharp downward revisions for the prior two months, suggesting the labor market had been stumbling far before economists initially expected.

“Incorporating the revisions for January and February, which reduced nonfarm employment by 69,000, monthly job gains have averaged 197,000 over the past 3 months,” said Bureau of Labor Statistics (BLS) Commissioner Erica L. Groshen. “In the 12 months prior to March, employment growth averaged 269,000 per month.”

In March, the civilian labor force participation rate was little changed again at 62.7 percent, remaining at its 36-year low. Since April 2014, the participation rate has remained within a narrow range of 62.7 percent to 62.9 percent.

The less-reported but more important employment-to-population ratio was unchanged at 59.3 percent, where it has now been for the third consecutive month.

Among the 8.6 million counted by BLS as unemployed, the number of new entrants decreased by 157,000 in March and is down by 342,000 over the year. Further, the number of long-term unemployed — or, those jobless for 27 weeks or more — was again unchanged at 2.6 million in March, and accounted for 29.8 percent of the total unemployed.

The U.S. economy continues to remain a part-time economy, which is explaining a good deal of the stagnant wage growth. Industries providing higher-paying, full-time work were stagnant this month. Employment in these major industries, including construction, manufacturing, wholesale trade, transportation and warehousing, information, and financial activities showed little change over the month.

The mining industry, which includes support for oil and gas extraction, declined by 11,000 in March. The industry has lost 30,000 jobs thus far in 2015.

Not surprisingly, the number of persons employed part time for economic reasons — referred to as involuntary part-time workers — was unchanged in March at 6.7 million. These are Americans who want full-time employment, but were working part time either because their hours had been cut back or because they were simply unable to find a full-time job.

Among the 2.1 million Americans marginally attached to the labor force, 738,000 were discouraged workers in March, or those who have quit on the American dream because they don’t believe there is a job for them in the labor market.

Real unemployment, which factors in those previously mentioned, fell slightly to 10.9 percent.

The Federal Reserve policy-making committee (FOMC) has said it won’t start raising interest rates until it reaches its dual mandate of full employment (5.2%-5.6%) and price stability due to sustainable inflation growth (1.7%-2%). While the unemployment rate has allegedly met the prerequisite range, the inflation target has remains stubbornly elusive. Inflation isn’t likely to move higher until now-stagnant wages increase significantly.