April 7, 2017

March 2017 Employment Situation Summary (040717): 98K Jobs Added, Retail Sector Socked; 4.5 Percent Unemployment Rate; Household Survey Shows 1.38 Million Jobs Added, 1.26 Million Full-Time, in First Quarter; Wage Flatness Continues

Filed under: Economy,Taxes & Government — Tom @ 7:26 am

Topside Note: Lacking time for a detailed look, I should note that the reported seasonally adjusted results for the Establishment Survey overstate the underlying strength of the raw results by perhaps 40,000 – 50,000 jobs. Readers should recall that February’s original number understated the underlying raw results by at least 150,000 (120,000 in the private sector).

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Predictions:

  • Yahoo’s Economic Calendar, Markets — 175K jobs added, 4.7 percent unemployment rate
  • Yahoo’s Economic Calendar, Briefing.com — 210K jobs added, 4.7 percent unemployment rate
  • Associated Press — 180K jobs added, , 4.7 percent unemployment rate.

The report will be here at 8:30. A time crunch kept me from looking at the not seasonally adjusted results before the release, so I’ll catch up shortly after it happens. The full report containing all tables in one place will be here.

HERE IT IS:

The unemployment rate declined to 4.5 percent in March, and total nonfarm payroll employment edged up by 98,000, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services and in mining, while retail trade lost jobs.

Household Survey Data

The unemployment rate decreased by 0.2 percentage point to 4.5 percent in March, and the number of unemployed persons declined by 326,000 to 7.2 million. Both measures were down over the year.

Among the major worker groups, the unemployment rates for adult women (4.0 percent), Whites (3.9 percent), and Hispanics (5.1 percent) declined in March. The jobless rates for adult men (4.3 percent), teenagers (13.7 percent), Blacks (8.0 percent), and Asians (3.3 percent) showed little or no change.

… Establishment Survey Data

Total nonfarm payroll employment edged up by 98,000 in March, following gains of 219,000 in February and 216,000 in January. Over the month, employment growth occurred in professional and business services (+56,000) and in mining (+11,000), while retail trade lost jobs (-30,000).

In March, employment in professional and business services rose by 56,000, about in line with the average monthly gain over the prior 12 months. Over the month, job gains occurred in services to buildings and dwellings (+17,000) and in architectural and engineering services (+7,000).

Mining added 11,000 jobs in March, with most of the gain occurring in support activities for mining (+9,000). Mining employment has risen by 35,000 since reaching a recent low in October 2016.

In March, employment continued to trend up in health care (+14,000), with job gains in hospitals (+9,000) and outpatient care centers (+6,000). In the first 3 months of this year, health care added an average of 20,000 jobs per month, compared with an average monthly gain of 32,000 in 2016.

Employment in financial activities continued to trend up in March (+9,000) and has increased by 178,000 over the past 12 months.

Construction employment changed little in March (+6,000), following a gain of 59,000 in February. Employment in construction has been trending up since late last summer, largely among specialty trade contractors and in residential building.

Retail trade lost 30,000 jobs in March. Employment in general merchandise stores declined by 35,000 in March and has declined by 89,000 since a recent high in October 2016.

Employment in other major industries, including manufacturing, wholesale trade, transportation and warehousing, information, leisure and hospitality, and government, showed little or no change over the month.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.3 hours in March. In manufacturing, the workweek edged down by 0.2 hour to 40.6 hours, and overtime edged down by 0.1 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by
0.1 hour to 33.5 hours.

In March, average hourly earnings for all employees on private nonfarm payrolls increased by 5 cents to $26.14, following a 7-cent increase in February. Over the year, average hourly earnings have risen by 68 cents, or 2.7 percent. In March, average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $21.90.

The change in total nonfarm payroll employment for January was revised down from +238,000 to +216,000, and the change for February was revised down from +235,000 to +219,000. With these revisions, employment gains in January and February combined were 38,000 less than previously reported. Monthly revisions result from additional reports
received from businesses since the last published estimates and from the recalculation of seasonal factors. Over the past 3 months, job gains have averaged 178,000 per month.

The “recalculation of seasonal factors” phrase makes one wonder how much of the drop is due to that as opposed to “additional reports received from businesses.” If that’s discernible, I’ll let readers know.

Obviously, a month where only 60,000 more people are working than in the previous month isn’t strong, but the unemployment rate drop, depending on its causes, may completely contradict that.

We’ll see. More shortly.

UPDATE: I’m going to look at the published report and tables for now, because the detailed tables aren’t yet available, and BLS site is running very slow (references are to seasonally adjusted figures unless otherwise note) —

  • The unemployment rate drop is for the “right” reasons. The civilian labor force expanded by less than one would hope (+145K), but that’s after two previous months totaling over 900K. The big news is that employment increased by 472K (919K in past two months; 1.376 million in first quarter after separating actual January results from population adjustments), and unemployment declined by 326K, both very positive results.
  • Black male unemployment increased from 7.8 percent to 8.2 percent, but black female unemployment fell to from 7.1 percent to 6.6 percent, which has to be about the lowest such figure in decades, and maybe ever. Update: Actually, the rate was lower during early and mid-2007, and most of 1999-2001.
  • Full-time employment is on an absolute tear. The first quarter figures: March, +476K; Feb., +326K; Jan., +457K; Total first quarter, 1.259 million. This is a very volatile number from month to month, but three strong months in a row should be enough to declare a favorable trend. I don’t think we saw a calendar quarter that strong during the entire Obama era (Update: At 1.446 million, 2nd quarter 2010, the first full quarter after jobs finally began to get recovered after the recession, was the only quarter which was stronger, but that was juiced by Census hiring). A comparison: Full-time employment only increased by 735K during last year’s final three quarters.
  • The fully-loaded U-6 unemployment rate is 8.9 percent, though I need to emphasize that it and the main U-3 rate rate still in my view understated because of artificially excluding people who are looking for work, but not hard enough by the government’s definitions, from the workforce.
  • On the Establishment Survey front, the goods-producing sector was positive across the board, though less so than one would like to see it: Mining, +11K; Construction, +6K; Manufacturing, +11K.
  • The retail sector disaster was in three places: General Merchandise stores (-34.7K), clothing stores (-5.8K), and health and personal care stores (-4.1K). This is a net post-Christmas purge of jobs one suspects aren’t coming back. Update: The unadjusted Feb.-March bloodbath in retail was the worst since 2009. Update 2: To be clear, what happened, when looking at the raw data, is that the February purge was worse than usual (-228K), and the typical post-purge pickup in March barely happened (+10K).
  • Actual, not seasonally adjusted non-postal federal employment has dropped by 8,400 in the past two months, perhaps indicating Trump’s hiring freeze is having results. Update: The same two months last year saw an increase of 2,800.
  • There’s a serious disconnect between the Household and Establishment Surveys when one looks at Establishment Survey hours worked. With 1.26 million full-time jobs added during the first quarter (and only 120,000 part-time) in the Household Survey, you would think that average weekly hours would have increased by about 0.2 hours. Instead, the figure has fallen by o.1 hours. That said, the average hourly and weekly earnings news continues to be unimpressive, and still would be unimpressive if the work week had increased by as much at the increase in full-time employment would have predicted.

NOT SEASONALLY ADJUSTED RESULTS: February’s Establishment Survey raw numbers for total jobs added overall (+670K) and in the private sector (+593K) were disappointing, and far below benchmarks of 950K and 850K I would have established ahead of time if I had had the time to do so. My preliminary take is that the seasonal adjustments were actually generous, somewhat offsetting February’s understated seasonally adjusted results. That is, the Establishment Survey’s seasonally reported results, as mediocre as they were, overstated the underlying strength of the raw results.

OVERALL, this is a “beauty (or lack of it) is in the eye of the beholder” report. The payrolls jobs and earnings results are disappointing, but the good news in the unemployment rate drop and particularly the sharp increase in first-quarter full-time jobs run counter to that. It seems we’ll have to wait until future reports come out to see which of the two sharply different pictures of the job market is more valid.

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6 Comments

  1. Regarding the “disconnect” between the Household and Establishment surveys, a couple of items to keep in mind:

    - The Household full-/part-time split is per employee, not per job worked by the employee. In other words, if one works two 18-hour/week jobs, one is considered to be working “full-time” because one works 36 hours.

    - This is borne out in Table A-16. Compared to last March, on a NSA basis, 312K more people had one primary full-time (35+ hours/week) and at least one secondary part-time job (a total of 4.57M last month), while 93K more people had only multiple part-time jobs (a total of 2.14M last month).

    Comment by steveegg — April 7, 2017 @ 11:42 am

  2. Related:

    153,000,000 Americans Employed in March, Setting 2nd Straight Record

    http://www.cnsnews.com/news/article/susan-jones/153000000-americans-employed-march-setting-2nd-straight-record

    …The Labor Department’s Bureau of Labor Statistics said the labor force participation rate remained flat at 63 percent in March; and the number of Americans not in the labor force increased slightly to 94,213,000, up 23,000 from February’s 94,190,000…

    …The 94,213,000 million people counted as not participating in the labor force last month includes millions of baby boomer retirees, students, the disabled, homemakers and others who do not work for various reasons…

    …In March, the nation’s civilian noninstitutionalized population, consisting of all people age 16 or older who were not in the military or an institution, reached 254,414,000. Of those, 160,201,000 participated in the labor force by either holding a job or actively seeking one.

    The 160,201,000 who participated in the labor force equaled 63 percent of the 254,414,000 civilian noninstitutionalized population…

    …In CBO’s latest projections, the rate of labor force participation—the share of the civilian noninstitutionalized population age 16 or older that is either working or seeking work—declines from 62.8 percent this year to 61.1 percent in 2027 (versus last year’s projection of 60.6) and to 59.3 percent in 2047 (versus 57.0 projected last year)…

    …However, CBO said it expects those three factors to be “mostly offset” by three trends that are expected to increase participation.

    – First, the population is becoming more educated, and workers with more education tend to participate in the labor force at higher rates than do people with less education.

    –Second, the racial and ethnic composition of the population is changing in ways that, on net, increase participation. CBO expects Hispanics (who make up an increasing share of the population) and non-Hispanic whites to participate at higher rates than the average.

    – Third, increasing longevity is expected to lead people to work longer…

    There are a few points of interest in the article which bear following. The last item I find disturbing for more than one reason. That being the CBO’s factor for increasing worker participation rate, i.e. race. Note who is NOT included in the positive contribution to increasing the labor participation rate – Blacks. I for one want to know why the CBO thinks Blacks will contribute less in the future.

    Comment by dscott — April 7, 2017 @ 5:25 pm

  3. Interesting points. Thx. What’s also interesting that all three metrics (FT, PT, and multiple jobs, seasonally adjusted) increased (+476K, +49K, +138K).

    Also, the raw number of Full-time workers (as opposed to full-time jobs, consistent with your point) increased by 996K in first quarter — best first quarter on records back to 1968.

    Total raw employment increased by 2.101 million in Feb. and March combined — best on records back to 1948.

    If the Household Survey is right, things are booming. ADP results would tend to support this. BLS establishment survey doesn’t.

    Comment by Tom — April 7, 2017 @ 5:41 pm

  4. Robots Take Over Tedious Chore: Mowing Lawns

    http://dfw.cbslocal.com/2017/04/06/robots-take-over-tedious-chore-mowing-lawns/

    How many H2B visas can we now eliminate? Robots doing jobs Americans won’t…

    Comment by dscott — April 7, 2017 @ 5:58 pm

  5. “Robotic lawn mower technology is hugely popular in Europe, but slow to catch on it America. Crandall says product costs–$1,500 to $4,000–is one reason. ”

    Wonderful to see these products going mainstream. If the price point follows the pattern of 3-D printers, we’ll see the robot-mower as cheap or cheaper than push models in 4-8 years.

    Like Uber, this technology may be surprisingly disruptive to social status quos, in unpredictable ways. An elderly person could more likely stay in their home, able to maintain the lawn without paying an annual lawn-company fee. The interviewed Dad is able to spend more time with his toddler. The effect to municipal budgets for mowing parks could be significant. We’ll need to address the unhappy municipal employees who will need important re-training with transition assistance to new skills for a new job.

    The school bus will probably never drive itself, or will the bus driver change to a Safety oversight role?

    An amazing set of products, based on GPS technology. We trust our equipment we so much today!

    Comment by Cornfed — April 8, 2017 @ 6:27 pm

  6. Well, thought there was a DARPA challenge on this topic, to show the time lag from the taxpayer’s research investment to commercial product use. Not able to find one specific to lawn mower.

    google “darpa lawn mower challenge”

    For the technically inclined or just curious about innovative research:

    http://www.roboticstrends.com/article/why_so_many_robots_struggled_with_the_darpa_challenge

    Something more in-depth, from the top-10 hits:
    link.springer.com/content/pdf/10.1007/978-94-007-4516-2_3.pdf
    Energy Efficient Complete Coverage Path Planning for Vacuum Cleaning Robots

    Path Planning Algorithms for Agricultural Field Machines, 2007
    lib.tkk.fi/Diss/2007/isbn9789512290802/isbn9789512290802.pdf

    Efficient complete coverage of a known arbitrary environment for autonomous robots. 2012
    pdfs.semanticscholar.org/4298/a7c05b6f63a659c89b7ba690020bbdcec5cb.pdf

    pdfs.semanticscholar.org/4298/a7c05b6f63a659c89b7ba690020bbdcec5cb.pdf

    Comment by Cornfed — April 8, 2017 @ 6:44 pm

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