April 6, 2012

The March Employment Situation Summary (040612): 8.2% Unemployment, only 120K Seasonally Adjusted Job Adds

Filed under: Economy,Taxes & Government — Tom @ 8:03 am

Econ catch-up:

  • ISM Services: 56.0%, down from 57.3% in February. Still well into expansion.
  • Auto Sales: GM barely beat out Ford after trailing in March 2011. GM was up 12% over a year ago. Others: Ford, +5%; Chrysler, +34%; Toyota, +15%; Nissan, +13%; Honda, -5%. Overall sales were up 12.7% from a year ago.
  • ADP Private Sector Employment: +209,000 seasonally adjusted private-sector jobs added; basically in line with expectations. January and February were revised upward by 9,000 and 14,000, respectively.

Predictions:

  • Associated Press (“Fourth straight month of strong US hiring expected”) — “The U.S. economy probably generated more than 200,000 jobs in March, capping the best four months of hiring since before the recession.”
  • Time quotes Bloomberg – ”According to Bloomberg News, economists predict that the report will show the economy gained 205,000 jobs in March, roughly in line with a report from payroll services firm ADP, which estimated that the private sector added 209,000 jobs last month. If the figure does come in above 200,000 it will be the fourth consecutive month of more than 200,000 jobs being added to the economy.”
  • Reuters – “Economists, on average, expect the report to show that the economy added 203,000 jobs in March, according to a Reuters poll.”
  • Business Insider’s email got specific: “Business Insider projects a gain of 193,000 for March, with revisions of nearly 40,000 new jobs to the February and January reports.”

Raw Numbers Review:

Readers here know that I believe the real story is in the raw numbers, especially because the seasonally adjusted numbers have been so skewed by the POR (Pelosi-Obama-Reid) Economy since late-Spring 2008.

After February’s report, I wrote the following in reaction to the following record of actual (i.e., not seasonally adjusted) job additions for the past five years:

PrivateSectorNSAJantoJue2007to2012 PrivateSectorSAJantoJune2007to2012

For the next four months to be truly impressive and representative of a genuine recovery, the economy in my view will have to add at least 4.2 million jobs on the ground. Given that this year’s gas-price surge arrived two months earlier than last year’s, that’s going to be a tough climb.

In March, in the private sector, that has to mean 950,000 or more jobs added. My gut reaction is that they will be there, and that revisions to January and February will be positive. How that translates into seasonally adjusted numbers is nowhere near as important. We’ll see.

The report will be here at 8:30.

HERE IT IS: Ruh-roh (full version with tables) –

Nonfarm payroll employment rose by 120,000 in March, and the unemployment rate was little changed at 8.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in manufacturing, food services and drinking places, and health care, but was down in retail trade.

… Household Survey Data

The number of unemployed persons (12.7 million) and the unemployment rate (8.2 percent) were both little changed in March.

… Establishment Survey Data

Total nonfarm payroll employment rose by 120,000 in March. In the prior 3 months, payroll employment had risen by an average of 246,000 per month. Private-sector employment grew by 121,000 in March, including gains in manufacturing, food services and drinking places, and health care. Retail trade lost jobs over the month. Government employment was essentially unchanged.

… The change in total nonfarm payroll employment for January was revised from +284,000 to +275,000, and the change for February was revised from +227,000 to +240,000.

The total seasonally adjusted change including prior-month revisions is +124,000 — about 60% of what everyone was predicting.

Assuming that the seasonally adjusted number reflects the raw data (not necessarily a safe assumption, as history has shown), it seems that there are only two ways you can get to a lower unemployment rate with weak job additions: 1) the two surveys (Household and Establishment) are seriously out of sync, and the Household Survey news is really good, or 2) if they are in sync, the number of people in the workforce is continuing to shrink.

More later.

UPDATE: Even though there’s a lot of slack in the economy and a lot of people who could be working if the jobs were there, the raw number for March in the private sector is far lower than last year, barely better than two years ago, and far lower than every year from 2004-2007 — y’know, when the press told us the economy was so unimpressive but the unemployment rate was much, much lower –

NSAandSAprivateEmpToMarch2012

In historical context, the seasonally adjusted figure of 121K doesn’t look skewed in either direction.

An acceptable raw number for April will have to be 1.25 million or more. Anything can happen, but that does not seem at all likely. It seems more likely that it will be about 1 million and generate another seasonally adjusted figure in the low-100k range.

The misery this administration has needlessly inflicted on the unemployed and under-employed during its three-plus years in office because of poor and historically proven to be poor policy choices is unforgivable.

UPDATE 2: Zero Hedge — “The unemployment rate drops to 8.2% for one simple reason: the number of people not in the labor force is back to all time highs: 87,897,000.”

UPDATE 3: Silver Lining Dept. — The number of seasonally adjusted full-time workers increased by 882,000 in March (the NSA number increased by 1.329 million). Part-timers dropped steeply (-664K SA, -599k NSA).

But the total number employed per the Household Survey dropped by 31,000.

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5 Comments

  1. Here’s a table we should be watching when they finally update it again:

    http://www.bls.gov/news.release/metro.t03.htm

    In this state by state employment comparison we see in January the strong employment growth compared to the rest of the country by NORTH DAKOTA where domestic energy extraction on private lands has become a major economic boom to the area. 6.3% YOY increase in employment is nothing to sneeze at.

    NOT SEASONALLY ADJUSTED DATA -

    Looking at the actual labor numbers in aggregate which includes part timers, total employment for March 2012 hit 141,412,000 so we are almost back to emloyment levels when Obama took office in January 2009. Which is 3 million less than who were employed (144,607,000) in 1/08

    http://www.bls.gov/webapps/legacy/cpsatab1.htm

    However, we have to account for part timers for economic reasons. 7,753,000 total working in March 2012. In January 2009 it was 8,675,000 but in January 2008 it was 5,235,000.

    http://www.bls.gov/webapps/legacy/cpsatab8.htm

    Doing the numbers 8,675,000 (1/09) minus 7,753,000 (3/12) yields 922,000 decrease in economic part timers converted to full time positions. This is a good thing in the long run. However, 141,412,000 (3/12) minus 140,436,000 (1/09) means 976,000 total (aggregate) jobs RECOVERED since taking office to date, not jobs created or saved. So yes, there is a recovery of sorts.

    To clarify what we are looking at in terms of full time employment

    Date Total minus Part timers equals Full Timers

    1/08 144,607,000 – 5,235,000 = 139,372,000 full timers

    1/09 140,436,000 – 8,675,000 = 131,761,000 full timers

    3/12 141,412,000 – 7,753,000 = 133,659,000 full timers

    1,898,000 full timers have regained their jobs since 1/09 which is good news, however, we are still short 5,713,000 full timers.

    Yes, you can take issue with me on not using 1/12 figures (139,944,000 total employment 8,747,000 part timers) instead of current March figures. So no one can accuse me of taking a partisan spin on the employment picture.

    139,944,000 – 8,747,000 = 131,197,000 full timers as of 1/12. Draw your own conclusions compared to 1/09… Hence the seasonal adjustment factor to really compare.

    Comment by dscott — April 6, 2012 @ 11:33 am

  2. Thanks for the reminder. I made similar points about FT employment a few months ago.

    I’ll take sustained moves from PT to FT like the ones of the past few mos — but overall employment has to improve by a lot more too.

    Tom

    Comment by Tom — April 6, 2012 @ 12:18 pm

  3. [...] The March Employment Situation Summary (040612): 8.2% Unemployment, only 120K Seasonally Adjusted Jo… [...]

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  4. #2, at the time I did these numbers I discounted non-economic part timers since their numbers were fairly stable and shouldn’t affect the over all conclusion. However, after tossing that in my mind I must apologize that my presumption inadvertently increased the number of full timers giving a potentially faulty context by overstating them by 18.5 million or so due to the failure to remove those non-economic part timers.

    The correction:

    Non – economic part timers
    1/08 19,490,000

    1/09 18,734,000

    1/12 18,596,000

    3/12 18,615,000

    Subtracting out to give the proper number of full timers:

    1/08 119,882,000

    1/09 113,027,000

    1/12 112,601,000

    3/12 115,044,000

    On a year to date basis from 1/09 to 3/12, 2 million full timers have been added so far. But IF you do the proper comparison then fro 1/09 to 1/12 there has been a loss of 426,000 full timers. This basically says in two months 2.5 million jobs were recovered out of the 6.8 million that were lost. No one should be jumping up and down just yet though since typically from January to April in normal times there is a 2 million uptick in the run up to the summer. Employment in the US is highly cyclical with summer and winter holidays being the peak employment periods of the year. We are not going to know if this pace is sustained or destroyed by the rise in gasoline prices yet until May when the April figures come out.

    We have had a 57 cent rise in gasoline prices since January from a national average of $3.33 to $3.90. That translates roughly into an annualized $57 billion hit on the economy at a billion per penny increase. Roughly about a 0.4% reduction in annual GDP ($57 billion/$14 trillion).

    http://www.tampagasprices.com/Retail_Price_Chart.aspx

    Comment by dscott — April 6, 2012 @ 4:33 pm

  5. [...] Solis, Head of the Department of Labor, reacting to yesterday’s “ruh-roh” jobs report, is out of touch, but on [...]

    Pingback by BizzyBlog — April 7, 2012 @ 7:42 am

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