Friday, April 3, 2015

March jobs report: the good streak is broken

- by New Deal democrat


  • 126,000 jobs added to the economy
  • U3 unemployment rate unchanged at 5.5%
With the expansion firmly established, the focus has shifted to wages and the chronic heightened unemployment.  Here's the headlines on those:

Wages and participation rates
  • Not in Labor Force, but Want a Job Now: down -169,000 from 6.538 million to 6.369 million
  • Part time for economic reasons: up 70,000 from 6.635 million to 6.605 million
  • Employment/population ratio ages 25-54: down -0.1% to 77.2% 
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up +0.2% from $20.82 to $20.86,  up +1.8%YoY (this YoY change is a bounce from last month's +1.5%). (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)

January was revised down by -38,000 from 239,000 to 201,000.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were generally negative for the second month in a row.

  • the average manufacturing workweek declined -0.1 to 40.9 hours.  This is one of the 10 components of the LEI and so will affect it negatively.

  • construction jobs decreased by -1,000. YoY construction jobs are up 282,000 YoY.  

  • manufacturing jobs also decreased -1,000, and are up 188-,000 YoY.
  • Professional and business employment (generally higher-paying jobs) increased 40,000 and is  up  662,000 YoY.

  • temporary jobs - a leading indicator for jobs overall - increased by 11,400.

  • the number of people unemployed for 5 weeks or less - a better leading indicator than initial jobless claims - increased by 57,000 to  2,488,000, compared with December 2013's low of 2,255,000.

Other important coincident indicators help us paint a more complete picture of the present:

  • Overtime decreased by 0.1 hour from 3.4 hours to 3.3 hours

  • the index of aggregate hours worked in the economy fell -0.2 from 103.1 to 102.9.

  • The broad U-6 unemployment rate, that includes discouraged workers decreased from 11.0% to 10.9%
  • the index of aggregate payrolls rose by 0.2% to 122.1.
Other news included:
  • the alternate jobs number contained in the more volatile household survey increased by 34,000 jobs.  This represents a 2,535,000 million increase in jobs YoY vs. 3,128,000 in the establishment survey. 

  • Government jobs increased by 1,000.
  • the overall employment to population ratio for all ages 16 and above was unchanged at 59.3%,  and has risen by +0.3% YoY. The labor force participation rate declined -0.1% from 62.8% to 62.7%  and is down -0.5% YoY, and is equal to its 2014 low (remember, this includes droves of retiring Boomers).


Obviously this was a disappointing report relative to the last year of reports.  The headline numbers were positive or neutral, but most of the internal numbers declined. That there were downward revisions to the previous two months' numbers is also not something that happens in a robust expansion. Most of the leading indicators in the report also declined.

There were a few bright spots, as wage growth increased, and those not in the labor force who want a job now decreased.  But these really just reversed last month's poor numbers.

In the longer view, while this is a bad month, I do not think the expansion itself is in danger.  We are importing some of the global weakness, and the oil patch has a very focused decline, which has shown up in the initial jobless claims in the last month or two.  In fact, the most noteworthy item in the report was that there have been -11,000 job losses in areas that typically support the oil and gas industries.

If we were to see a real decline of concern, it would show up in housing and vehicle purchases.  We just got a good March report on vehicle sales, so the reports on the housing industry this month are of added importance.