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Payrolls Indicate to Markets; Strong Labor Recovery Not Just Yet

April 2nd, 2010 Michael McDonough

Payrolls moved up by +162K in March, compared to a forecast of +184K.  Combined January and February revisions totaled an additional 40K jobs created.  March added 48K census workers making the ex-census change in payrolls a modestly strong +136K.  It is impossible to determine to what extent weather had on this report, but I expect payrolls should maintain modest growth, at best, over the next several months (ex-census).  The unemployment rate remained steady at 9.7%, as the workforce continues to increase.  This report is essentially neutral for the market.  Long term unemployment continued to tick up, while average hourly earnings fell -0.1% from last month.  Hours worked remain relatively low at 34.0%, and will likely move up a bit more before we see a big turn in hiring.  While overall these modest gains are positive, it is unlikely it will have a significant effect on Fed policy over the short-term.

On another note, temp employment continues to tick up, however, it has begun to come off of its recent highs.  This index tends to be a good forward looking indicator toward the overall payroll number:

Source: BLS

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