March 2015 Employment Situation Summary (040315): OUCH — Only 126K Payroll Jobs Added; Prior Months Knocked Down by 69K; Unemployment Stays at 5.5%

Econ recap:

• ISM Manufacturing — 51.5, the lowest in quite a while, but still in expansion.
• ISM Non Manufacturing — coming out Monday at 10 a.m. Predictions are for a strong 56.9 reading, repeating February’s figure.
• Car Sales — only up 0.6 percent from March 2014. Supposedly weather. I’m not so sure. GM, Ford and Honda were down. Toyota and Chrysler were up.
• ADP Private Sector Payrolls — 189,000 jobs added vs. expectations of 225K. Lowest figure in 14 months.
• Factory Orders — up 0.2 percent in February, but January went from -0.5 percent to -0.7 percent. January-February factory orders and shipments are significantly below Jan.-Feb. 2014.
• Construction Spending — Dropped in February vs. expectations of an increase after dropping in January.
• Initial Unemployment Claims — a very low 268,000 seasonally adjusted claims last week, making it a strong jobs indicator even as most jobs-related numbers are coming in as disappointments.

Predictions: Yahoo’s Business calendar still has Briefing.com predicting 260,000 payroll jobs added, and the “markets” predicting 250,000. Both sources say the unemployment rate will stay at 5.5 percent.

Zero Hedge notes that Morgan Stanley has the “weather” excuse on standby if the numbers aren’t so good.

Not Seasonally Adjusted Benchmarks: I’m presenting March and April to make the point that the economy really needs to add at least 2.3 million jobs on the ground in the next two months:

I think there’s strong reason to doubt that this is really going to happen.

For March to be a genuinely strong month — regardless of the seasonally adjusted results — we need to see 1.05 million jobs added overall (11 years ago it was 1.04 million when the economy was in better shape — why, besides crappy policy, shouldn’t we be able to do that now? — and 900,000 in the private sector.

On the seasonally adjusted side, given that last month’s seasonalizing led to a result that was about 75,000 more than what would have been expected based on the results two and three years ago, we seem to be due for a result that trails what one might “logically” expect.

We’ll see here at 8:30.

HERE IT IS (permanent full HTML link) — Ruh-Roh; also note that prior months came down to earth a bit:

Total nonfarm payroll employment increased by 126,000 in March, and the unemployment rate was unchanged at 5.5 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in professional and business services, health care, and retail trade, while mining lost jobs.

Household Survey Data

In March, the unemployment rate held at 5.5 percent, and the number of unemployed persons was little changed at 8.6 million. Over the year, the unemployment rate and the number of unemployed persons were down by 1.1 percentage points and 1.8 million, respectively.

… The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 2.6 million in March. These individuals accounted for 29.8 percent of the unemployed. Over the past 12 months, the number of long-term unemployed has declined by 1.1 million.

The civilian labor force participation rate was little changed at 62.7 percent in March. Since April 2014, the participation rate has remained within a narrow range of 62.7 percent to 62.9 percent. In March, the employment-population ratio was 59.3 percent for the third consecutive month.

… Establishment Survey Data

Total nonfarm payroll employment increased in March (+126,000). Over the prior 12 months, employment growth had averaged 269,000 per month. In March, employment continued to trend up in professional and business services, health care, and retail trade, while employment in mining declined.

Employment in professional and business services trended up in March (+40,000). Job growth in the first quarter of 2015 averaged 34,000 per month in this industry, below the average monthly gain of 59,000 in 2014. Within professional and business services, employment continued to trend up in architectural and engineering services (+4,000), computer systems design and related services (+4,000), and management and technical consulting services (+4,000).

Health care continued to add jobs in March (+22,000). Over the year, health care has added 363,000 jobs. In March, job gains occurred in ambulatory health care services (+19,000) and hospitals (+8,000), while nursing care facilities lost jobs (-6,000).

In March, employment in retail trade continued to trend up (+26,000), in line with its prior 12-month average gain. Within retail trade, general merchandise stores added 11,000 jobs in March.

Employment in mining declined by 11,000 in March. The industry has lost 30,000 jobs thus far in 2015, after adding 41,000 jobs in 2014. The employment declines in the first quarter of 2015, as well as the gains in 2014, were concentrated in support activities for mining, which includes support for oil and gas extraction.

Employment in food services and drinking places changed little in March (+9,000), following a large increase in the prior month (+66,000). Job growth in the first quarter of 2015 averaged 33,000 per month, the same as the average monthly gain in 2014.

… In March, the average workweek for all employees on private nonfarm payrolls declined by 0.1 hour to 34.5 hours. The manufacturing workweek decreased by 0.1 hour to 40.9 hours, and factory overtime remained at 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 33.7 hours.

In March, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $24.86. Over the year, average hourly earnings have risen by 2.1 percent. Average hourly earnings of private-sector production and nonsupervisory employees rose by 4 cents to $20.86 in March.

The change in total nonfarm payroll employment for January was revised from +239,000 to +201,000, and the change for February was revised from +295,000 to +264,000. With these revisions, employment gains in January and February combined were 69,000 less than previously reported. Over the past 3 months, job gains have averaged 197,000 per month.

So only 57,000 more people were estimated to be working in March than were estimated to be working February.

What was that about a “robust” and “durable” economy?

The final paragraph in the report may be a precursor to more downward revisions, making one wonder if March will stay in triple digits by the time the dust settles.

The work-week reduction is a real kick in the pants, and the 7 cent wage increase hardly makes up for that.

I’ll have more after looking things over a bit.

Not Seasonally Adjusted Benchmarks: As would be expected based on the seasonally adjusted results, March was a massive disappointment:

• Total Nonfarm — only 823,000 jobs added vs. the 1.05 million benchmark. The raw number is the second-lowest in the past five years. Luckily for Team Obama, the seasonal conversion accurately reflects the raw performance (whereas I thought there would be a pretty good chance of an understatnement).
• Private sector — only 720,000 jobs added vs. the 900,000 benchmark. The raw number is the lowest in past five years, and badly trails three out of those prior years. I think the seasonally adjusted private-sector number is a bit on the high side (e.g., a 29K fewer raw job additions than in 2013, but an 11K higher result).

Other observations (seasonally adjusted unless otherwise indicated):

• The Household Survey had a labor force drop of 96,000, and showed only 34,000 more people employed. The participation rate dropped a tenth of a point to 62.7 percent. “Not in the labor force” leaped to what is surely an all-time high of 93.175 million. Update: Yes, it is an all-time high, and the participation rate is the lowest since February 1978.
• Full-time workers increased by 190K; part-timers fell by 170K. (But the work week contracted? Yes, likely thanks to the next item.)
• Once again, BLS didn’t disclose a big increase in temp employment (+11,400), even though it’s over 25 percent of the increase it touted in professional services.
• Low oil prices are having an impact on the domestic industry, with mining down by over 11,000.
• On the work-week front, the biggest decline (0.4 hours) was in construction, which doesn’t bode well for March’s construction spending element of GDP. The only increase besides the 0.1 hours in financial activities was in “Utilities,” a big 0.9 hours per week, which may reflect responses to wintry conditions in March.

Summary: Today’s employment report is best seen as the jobs data starting to catch up to the other relatively weak economic news we’ve been seeing for at least six weeks. The guess here is that the negative catch-up will continue next month.

To be doing well, the economy in April will need to add about 1.25 million overall jobs with 1.20 million of them in the private sector. That seems quite unlikely. If it only adds a million in each category, and even that seems like a stretch, seasonally adjusted figures accurately reflecting that will only show 150,000 jobs added — and Team Obama is a bit due for a seasonal understatement.

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UPDATE, 9:50 a.m.: In another example of twisting the monthly narrative, BLS touted the 7-cent increase in hourly wages, and didn’t note the 6-cent reduction in average weekly earnings.

UPDATE 2, 9:55 a.m.: Zero Hedge — “Only Americans 55 And Older Found Jobs In March”

UPDATE 3, 10 a.m.: Ed Morrissey at Hot Air —

The problem for the US is that we are almost six years into a so-called recovery, and we still haven’t seen sustained growth, especially not the robust kind of growth one would expect after a serious recession like 2007-2009. The problem has been economic and regulatory policies that hamper growth and discourage investment outside of politically-connected firms. Until we solve that problem, our six-year stagnation will be anything but temporary.