With two successive record-high readings for initial jobless claims, the market was already bracing for a very bad US employment situation report on Friday. The report showed March non-farm payrolls having their first monthly decline since September 2010 and their largest decline since March 2009. However the declines were smaller than the five monthly readings from November 2008 to March 2009. US unemployment jumped from 3.5% in February to 4.4% in March, which is the largest monthly increase since January 1975.
While there are expectations that the April employment situation report will be even more brutal, there was one segment that has held up surprisingly well. The March reading of average hourly earnings for production and non-supervisory employees came in at a 3.39% year-over-year increase. This was the third monthly increase in a row and the eighteenth month in a row that it has come in above 3% for the year-over-year rate.
Average hourly earnings have seen a significant upside move, starting in late 2017 and reaching a 3.62% year-over-year rate by last October, which was the highest reading since February 2009. However, the decline in November and December was the largest two-month decline since 2003. While it is uncertain that we will see an increase for the fourth month in a row in April, average hourly earnings have so far been resilient and may be a bright spot in upcoming US job reports.
Originally Published on April 3, 2020
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