- by New Deal democrat
I described two months ago as “the month the birds came home to roost.” Last month, pace Edgar Allen Poe, I said the birds were screeching “recession!”
This month, Poe’s birds decided to play with us, screeching instead: “Nevermind!”
This was a good report with mainly good internals, with one large exception.
Below is my in depth synopsis.
HEADLINES:
- 178,000 jobs gained, the biggest number since December 2024. Private sector jobs increased 186,000, while government jobs declined -8,000. The three month average rose from a puny +6,000 to +68,000.
- The pattern of downward revisions to previous months did continue. While January was revised upward by +34,000, February was revised downward by -41,000, for a net decline of -7,000.
- The alternate, and more volatile measure in the household report, declined by -64,000 jobs. On a YoY basis, this series DECLINED for the second month in a row, by -561,000 jobs, or an average of -47,000 monthly.
- The U3 unemployment rate fell -0.1% to 4.3%.
- The U6 underemployment rate rose +0.1% to 8.0%.
- Further out on the spectrum, those who are not in the labor force but want a job now rose by +66,000.
Leading employment indicators of a slowdown or recession
These are leading sectors for the economy overall, and help us gauge how much the post-pandemic employment boom is shading towards a downturn. These were mainly positive:
- The average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, fell -0.1 hour to 41.4hours, but still is now down only -0.2 hour from its 2021 peak of 41.6 hours.
- Manufacturing jobs rose +15,000, only the second increase in the last 12 months.
- Truck driving declined another -800.
- Construction jobs rose +26,000.
- Residential construction jobs, which are even more leading, rose +3,100, continuing the trend of stabilizing since last April.
- Goods producing jobs as a whole rose +43,000..
- Temporary jobs, which have declined by over -650,000 since late 2022, declined again this month, by -4,400, but remained above their post-pandemic low set last October.
- The number of people unemployed for 5 weeks or fewer declined -181,000.
Wages of non-managerial workers
- Average Hourly Earnings for Production and Nonsupervisory Personnel increased $.05, or +0.2%, to $32.07, for a YoY gain of +3.4%, its lowest YoY% gain since the pandemic. While this remains higher than the YoY inflation rate through February, even that is among the lowest gains in the past three years — and it is very much likely to change once March’s CPI is reported.
Aggregate hours and wages:
- The index of aggregate hours worked for non-managerial workers increased +0.2%, and is up only 0.7% YoY, below average for the past two years.
- The index of aggregate payrolls for non-managerial workers rose 0.3%, and is up 4.1% YoY, close to its post-pandemic low of 4.0% set last June.
Other significant data:
- Professional and business employment (for a change!) rose +2,000. These tend to be well-paying jobs. This remains above its October low, it remains lower YoY by -0.4%, which in the past 80+ years - until now - has almost *always* meant recession.
- The employment population ratio declined -0.1% to 59.2%, vs. 61.1% in February 2020, and its lowest since October 2020.
- The Labor Force Participation Rate declined -0.1% to 61.9% , vs. 63.4% in February 2020, and its lowest since November 2020.
SUMMARY
As I wrote at the opening above, this was a good report, but with a few significant negatives.
Let’s start with the good, which obviously include both the headline number and the decline in the unemployment rate and short term unemployed, as has been telegraphed by extremely low initial jobless claims. Goods producing jobs increased, including manufacturing, construction, and residential construction jobs. Professional and business jobs had a positive month, for a change.
There were some negatives, including a decline in the manufacturing work week, EPOP and LFPR. Truck driving jobs continued to decline. And the underemployment rate rose slightly.
But the most significant negatives had to do with wages. The increase in hourly nonsupervisory wages was among the lowest since the pandemic, and the YoY% change was the lowest. Aggregate hours for nonsupervisory also had a relatively small gain. Which means that, even nominally, the gain in aggregate nonsupervisory payrolls was close to its post-pandemic low. Consumer prices last March were unchanged. If the Cleveland Fed’s estimate of a 0.8% gain this March is accurate, that will mean March CPI will come in a 3.2% YoY. The estimated *real* gain in YoY nonsupervisory payrolls would only be 0.9%, the lowest since the pandemic, and a major cause for concern.
So it is very possible that this rosy-looking outlook could change by the end of next week, but for today the birds that came home to roost have played an April Fool’s joke: “Nevermind!”
