The March employment report disappointed with job gains of only +103k vs. expectations of +175k. The miss was due in part to a payback for the very strong +326k in February, and in part to unusually high snowfalls which were confirmed by the first loss of construction jobs in eight months. Manufacturing gained +22k, the sixth straight big increase, and the 16th in the last 17 months. The unemployment rate remained unchanged at 4.1% and wages ticked up +0.1% to +2.7% y/y. In other news, both ISM indexes slipped a bit but remained solidly in expansionary territory. Producer prices rose more than expected in March, from +2.8% y/y to +3.0%, while the core rate rose from +2.5% to +2.7%. Metals tariffs contributed to the price increases as steel mill products rose +1.9% m/m and steel scrap gained +4.3% m/m. The trade deficit widened from -$56.7B to -$57.6B, which will contribute to a soft Q1. However we maintain our forecast of +2.9% GDP growth for 2018.
