Friday, April 5, 2013

Employment Report: Bonddad Is Not Pleased

From the BLS:

Nonfarm payroll employment edged up in March (+88,000), and the unemployment rate was little changed at 7.6 percent, the U.S. Bureau of Labor Statistics reported today. Employment grew in professional and business services and in health care but declined in retail trade.

The headline number is extremely disappointing.  Let's delve into the details, starting with the household survey.

There are a few important points here.

1.) The number of employed dropped 206,000.
2.) The participation rate dropped .2%.
3.) The employment/population ratio decreased .1%
4.) The unemployment rate decreased 1%.

With the exception of the unemployment rate, none of these developments is healthy.

The unemployment rate does continue to move in the right direction.  However, notice how the total establishment job number is very disappointing relative to the progress that had been made?  Not good.

I've highlighted what I think are the big reasons for the drop.

1.) Total goods producing jobs cratered last month.  In February we see an increased of 73,000, compared to a March increase of 16,000, for a decrease of 57,000.

2.) The big drop occurred in the construction figure, which went from an increase of 49,000 to 18,000.  This accounts for 54% of the drop in the goods producing number.

3.) Non-durable goods manufacturing dropped by 17,000, going from a net positive of 10,000 to a decrease of 17,000.  This accounts for an additional 30% of the drop in goods producing jobs.

4.) Notice the mammoth drop in retail.  We went from an increased or 14,600 to a decrease of 24,100.  This is a big reason for the drop.  The losses were side spread.  From the report:  In March, job declines occurred in clothing and clothing accessories stores (-15,000), building material and garden supply stores (-10,000), and electronics and appliance stores (-6,000).

5.) Notice the 7,000 loss in government jobs.  Hello sequester.  Thanks for adding to my misery.  I'm sure you'll be back next month.

The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.6 hours. The manufacturing workweek decreased by 0.1 hour to 40.8 hours, and factory overtime rose by 0.1 hour to 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.8 hours. (See tables B-2 and B-7.) 

In March, average hourly earnings for all employees on private nonfarm payrolls, at $23.82, changed little (+1 cent). Over the year, average hourly earnings have risen by 42 cents, or 1.8 percent. Average hourly earnings of private-sector production and nonsupervisory employees, at $20.03, changed little (-1 cent) in March. (See tables B-3 and B-8.)

The decrease in the manufacturing workweek will subtract from the next LEI report.

Here's the one bit of good news:

The change in total nonfarm payroll employment for January was revised from +119,000 to +148,000, and the change for February was revised from +236,000 to +268,000.

Maybe that will happen with this report.