Friday, April 4, 2014

March jobs report: new highs in aggregate hours worked, private sector jobs

- by New Deal democrat

In March 192,000 jobs were added to the US economy.  The unemployment rate was unchanged at  6.7%. January and February were revised upward by +35,000.

As usual, first, let's look at the more leading numbers in the report which tell us about where the economy is likely to be a few months from now. These were mixed but with a tilt towards positive.
  • the average manufacturing workweek rose from 40.8  hours to 41.1, returning to its 2013 high. This is one of the 10 components of the LEI, and will contribute towards a strong positive number.

  • construction jobs increased by 19,000. YoY 151,000 construction jobs have been added.

  • manufacturing jobs fell by -1,000.

  • temporary jobs - a leading indicator for jobs overall - increased by 29,000.

  • the number of people unemployed for 5 weeks or less - a better leading indicator than initial jobless claims - rose to 2,461,000, compared with December's 2,255,000 low.

Now here are some of the other important coincident indicators filling out our view of where we are now:
  • The average workweek for all nonsupervisory workers rose by 0.3 hours from 33.4 hours to 33.7 hours.

  • Overtime hours increased from 3.4 to 3.5 hours.

  • the index of aggregate hours worked in the economy rose by 0.7 from 106.4 to 107.1. This is a new post-recession high and close to an all-time high.

  • The broad U-6 unemployment rate, that includes discouraged workers increased from 12.6% to 12.7%.

  • The workforce rose by 503,000. Part time jobs rose by 434,000.
Other news included:
  • the alternate jobs number contained in the more volatile household survey increased by 476,000 jobs.  The household survey jobs numbers had been lagging the establishment survey numbers, but as expected this difference has now been entirely made up, with the household survey showing a 2,351,000 increase in jobs YoY.

  • Government jobs fell by -1,000.

  • January was revised up from 129,000 to144,000.  February was also revised up by 22,000 to 197,000  Upward revisions happen in expansions, and after a weak spot in late 2013, these revisions in the last several months have all been positive.

  • average hourly earnings decreased  $.01 to $24.30. The YoY change is +22%.  As a result, YoY average real wages probably fell slightly in March, given the expected slight rise in consumer prices due to the weakening of the Oil choke collar.

  • the employment to population ratio rose from 58.8% to 58.9%, and has risen +0.4% YoY. The labor force participation rate also from 63.0% to 63.2%, but has declined 0.1% YoY.  The usual  caveats about discouraged workers and Boomer retirements apply.
  • the number of people who are not in the labor force but want a job now (the best measure of long time discouragement) totals 3,050,000.
This report had the best internals of any report in the last six or so months. Aggregate hours, overtime hours, and the manufacturing workweek, all of which had been weakening, made up all of their losses and in at least one case set a new high.  Counting by hours vs. jobs, almost all of the losses in the recession have been made up. Private sector jobs have now also made up all of their recession losses.

Wages remain a weak point, and the usual participation rate debate will continue.  We still are in the hole by several million jobs considering the population increase in the working age population since 2007, and the decline in wages in March does nothing to help consumer spending.