Jobs growth remains modest

The March '26 private sector jobs report released today was stronger than expected (186K vs 78K), but only modest when viewed from a multi-month perspective.

Chart #1

Chart #1 shows the monthly change in private sector jobs. For most of the past two years, jobs growth has alternated between strong and weak—up one month, down the following month. Over the past 12 months, private sector jobs growth has averaged a very modest 42K per month.

Chart #2

Chart #2 shows the 6-mo. annualized and year-over-year change in jobs. By these measures, we haven't seen any significant change in a jobs market that is plodding along at a very slow pace. At best, private sector jobs are growing at 0.5% annualized rate—not much to write home about, but not much to worry about either.

Chart #3

As Chart #3 shows, the unemployment rate has been drifting slowly higher, but not at a pace that we would expect to see if the economy were suffering from recessionary conditions. 

Chart #4

As the green asterisks in Chart #4 show, small business owners celebrated when Trump won his elections. But enthusiasm has waned in the past year, and is now only about average.

Given the ongoing hostilities in the Gulf region and the modest growth conditions currently prevailing in the U.S. economy, we are unlikely to see any material improvement in the near-term outlook. The positive contributions of AI-driven productivity gains are likely to be offset by an increase in the demand for money (i.e., a risk-off shift by investors). Meanwhile, the Fed is essentially on the sidelines, worried that higher energy prices could slow the economy while at the same time increasing the risk of higher inflation. The bond market, sensing this dilemma, is not expecting any near-term tightening or easing of monetary policy. 

It's a wait-and-see world we are living in.