Reports point to robust economy
Jobs, wages, manufacturing, vehicle sales all up for March
A quadrant of strong macroeconomic numbers coalesced Friday, collectively projecting a robust U.S. economy.
The U.S. economy created 215,000 new jobs in March.
Hourly earnings for American workers increased 2.3% in March.
The national Institute of Supply Management manufacturing index turned positive for the first time since August.
U.S. auto sales posted their best month in more than a decade.
The jump in hiring was driven by large gains in the construction, retail and health care industries. March marked the fifth time in the past six months that the proportion of Americans working or looking for work has increased, an encouraging trend after that figure fell to four-decade lows
last year.
The increase in the workforce “has been truly astounding — the strongest in over two decades, suggesting that the job market is finally pulling discouraged workers off the sidelines,” said James Marple, an economist at TD Economics.
“We’ve been through some rough patches, but we continue to generate a lot of jobs,” said Ward McCarthy, chief financial economist at Jefferies LLC in New York, who correctly forecast the gain in payrolls. “In a consumer-driven economy, that’s going to keep us headed in the right direction.”
The data suggests that employers remain confident enough in their business prospects to add staff, even as overall growth has slowed since last winter. Many analysts estimate that the economy grew at a 1% annual rate or below in the first quarter. Continuing job gains indicate that employers may see the slowdown as temporary.
Steady hiring is also contributing to somewhat higher pay. Average hourly wages rose 2.3% from a year earlier to $25.43. Annual wage gains have improved since the early years of the recovery, but they are below a peak of 2.6% reached in December.
Sluggish wage growth has been a weak spot in the economy and a source of frustration for many workers since the Great Recession ended in 2009. Paychecks typically grow at a 3.5% pace in a strong economy.
That frustration has spilled over into widespread demands for a higher minimum wage. California approved a measure this week to lift its minimum to $15 an hour by 2020, more than double the federal minimum of $7.25. New York lawmakers have also agreed on a $15 minimum by 2018.
Heavy hiring by low-wage employers is likely one driver behind the demands for greater pay. Retailers added 47,700 jobs last month and have created 358,000 in the past year. Hotels and restaurants gained 26,000 jobs in March.
That hiring has been offset by some higher-paying positions. Construction firms added 37,000 jobs last month, likely aided by warmer weather. Financial services companies added 15,000 jobs, and professional and business services, which include engineers, accountants and lawyers, added 33,000.
Manufacturing, which has been hit by slower growth overseas, posted another month of job losses. Mining, which includes the oil and gas drilling sector, also cut jobs. Low oil prices have cost that industry 185,000 jobs since September 2014.
More jobs can help fuel consumer spending, which is a critical source of growth this year. Other potential drivers of the economy, such as exports and business investment, have weakened.
The ISM said Friday that its manufacturing index rose to 51.8 last month from 49.5 in February. Any reading above 50 signals growth.
In the automotive sector, Ford, Nissan and Fiat Chrysler each reported big U.S. sales gains in March as the industry appeared to be headed for its best month in more than a decade.
Even General Motors, which has been cutting back on sales to rental car companies, saw a slight sales increase and said its retail sales to individual buyers rose 6%.
The increases showed that Americans are still buying cars and trucks in big numbers, despite predictions by some analysts and dealers that sales have peaked.
Mustafa Mohatarem, GM’s chief economist, said the U.S. economy remains strong, and that should help auto sales to continue to lead the recovery from recession. “We expect historically low interest rates, strong employment, rising wages and stable fuel prices to continue for the foreseeable future,” Mohatarem said in a statement.
Nissan sales were up 13%, hitting a record for any month in its history. At Fiat Chrysler and Ford, sales were up 8%, while they grew 0.9% at General Motors. Ford and Fiat Chrysler posted their best March numbers in a decade. Volkswagen, still mired in an emissions cheating scandal, saw its sales tumble 10.4%.
Industry analysts expected March sales to rise 7% to 8% over a year ago by the time automakers finished reporting numbers on Friday. Kelley Blue Book says sales should total around 1.66 million cars and trucks for the month, which could be the biggest number for any month since July 2005.
Relatively low gas prices, sweet lease deals, low interest rates, easy-to-get loans and an aging fleet of cars are driving the increase.
Bloomberg News contributed to this report.