Weaker job gains may weigh on outlook

Job gains are on a slowing trend through early 2018—except for a strong February—and becoming further concentrated in the West and Southeast.

The slowing trend is the result of weakness in certain markets as much as the result of a tight labor market. Bad weather contributed to weak job gains in March, but it remains to be seen whether jobs will bounce back amid rising concerns about a “trade war.”

The weakness remains focused in the middle and Northeastern states, but there also are signs of pickup in some of those states and metro areas. Oklahoma, for example, is among the places improving with the oil market.

This unevenness in the underlying job trends by geography and industry will weigh on a spending trend that already is letting up from a strong holiday (see post here). Here are the highlights from the latest jobs data through March:

  • Weak markets. Eleven states are growing at less than a 0.5% pace—with North Dakota, Alaska, and Maryland the worst off. As the oil and mining markets recover, the weakest markets increasingly include other states (such as Maryland) held back by a broader-based job weakness.
  • Local market exceptions. Cases of relatively strong local markets—despite weaker job markets at a state level—are evident in: Nashville-TN, Indianapolis-IN, and Louisville-KY, among other places. Conversely, Cleveland-OH, Virginia Beach-VA, St. Louis-MO, and Chicago-IL are performing relatively worse than their states.
  • Strong markets. The strength in the top 11 states by job growth (~2%+ growth) is led by local markets with the strongest gains nationally, which include: Riverside, San Jose and Sacramento-CA; Austin and Dallas-TX; Orlando and Jacksonville-FL; Seattle-WA; Phoenix-AZ; and Las Vegas-NV.

The differences by industry and local market are hidden amid the modest overall gain of 103,000 jobs in March—which was a slowdown from a strong gain of 326,000 jobs in February.

Contributing to the March slowdown were the “Nor’easter” storms that were likely behind a decline in construction, retail and food service jobs.

The job trends likely will weigh on sustained economic growth overall (see more here) and consumer retail spending (see retail-related trends here) in particular.

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