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Payrolls Increase 192K in March; Unemployment Rate at 6.7%
Monday, April 7, 2014 6:55 AM

The Labor Department reported the economy added 192,000 jobs during March, while the nation’s unemployment rate was unchanged at 6.7 percent. The number of unemployed persons was essentially unchanged at 10.5 million. The number of long-term unemployed (27 weeks or greater) was also unchanged at 3.7 million, about 35.8 percent of the unemployed.

The underemployment rate increased from 12.6 percent to 12.7 percent, representing about 19.8 million people in the labor force. About 2.2 million people were marginally attached to the labor force (not actively seeking a job, weren’t available for work), little changed from a year ago. Included in this number were 698,000 discouraged workers who believe there are no jobs available for them.

According to Brian Turner, director and chief strategist with Catalyst Strategic Solutions, the Federal Reserve has made it fairly clear that job growth is the centerpiece of its outlook on interest rates and that it will proceed with the scale back of its bond purchasing program. In a speech last week, Federal Reserve Chairman Janet Yellen emphasized that a major component of its monetary policy must include elements to strengthen labor markets. She reiterated the Fed’s stance to maintain its highly accommodative policies in such a way that promotes average Americans to find and retain a well-paying, full-time job.

“Previously, the Fed cited it was not prepared to permit short-term interest rates to increase until the nation’s unemployment rate dropped below 6.5 percent. They now are looking at a range of 5.2 percent and 5.6 percent as a guide,” notes Turner. “The drop in the target rate seems to acknowledge that despite the recent decline in unemployment (from 9.9 percent to 6.7 percent), the current pace of consumer spending has not materially changed, and to allow short-term rates to increase at the same time consumers remain on the sideline, would bring economic recovery to a halt.”

Consumer spending accounts for two-thirds of the nation’s GDP and is the basis for long-term stable growth and consumer loan demand.

Other Key Indicators this Week: 

  • Motor Vehicle Sales – Unit vehicle sales increased 6.9 percent in March reaching an annualized pace of 16.4 million units. Sales of domestic-made vehicles rose 7.1 percent while imported vehicles rose 6.3 percent.
  • Factory Orders – Bounced back strongly in February, rising 1.6 percent. A 3 percent gain in motor vehicle orders contributed to the advance along with a 13.4 percent increase in commercial aircraft orders.
  • Jobless Claims – Moved higher this week as initial claims increased 16,000 to a total of 326,000. The 4-week average of 319,500 remains stable and is about 20,000 below the level this time last month.