April 6, 2018

March 2018 Employment Situation Summary (040618): Only 103K SA Jobs Added, and Prior Months Revised Down 50K; Unemployment Rate Still 4.1 Percent; Black Unemployment Stays Below 7 Percent; YOY Weekly Earnings Up 3.3 Pct.

Filed under: Economy,Taxes & Government — Tom @ 7:30 am

Predictions:

  • According to this CNBC link, “the street” expects 190,000 seasonally adjusted payroll job additions, while the quoted “Wall Street veteran” expects 140,000.
  • That outlook would be in a sense be consistent with what Moody’s economist Mark Zandi said in the ADP Employment Report conference call on Wednesday. Zandi said that storm-related factors in the Northeast might suppress reported hiring there because of how the government counts people who are actually working. ADP’s report showed 241,000 private-sector jobs added, so Zandi didn’t seem to be lowballing as much as the “Wall Street veteran” just mentioned.
  • Bloomberg and Dow Jones are respectively suggesting 175,000 and 178,000 payroll jobs added, with the unemployment rate dropping to 4.0 percent. The see hourly wage gains of +0.3 percent to +0.2 percent, respectively.
  • Yahoo Finance is predicting 185,000 payroll jobs added and a 4.0 percent unemployment rate.

Working against the lowball predictions is the fact that last month’s seasonally adjusted payroll job additions (+313K overall and +287K in the private sector) understated the underlying strength of the raw numbers, as seen in comparing them to the previous four years, by well over 200,000 jobs:

NSAvsSAanalysis0318

It’s not unreasonable to expect a bit of a seasonally adjusted overstatement, though probably nowhere hear as big as last month’s understatement, this time around. If that seasonally adjusted overstatement occurs, we could get a seasonally adjusted nonfarm number as high as 250,000, even if the raw additions fall significantly short of the benchmark goals identified below.

As to those raw benchmarks:

NSAandSApayrolls0104thru0318

In light of the past record, I would hope that we see at least 1 million actual total nonfarm additions and 925,000 in the private sector. That performance, combined with February’s stellar raw numbers, would clearly show, regardless of how the seasonally adjusted numbers shake out, that the tax cuts passed in December are having their desired impact.

The report will be here at 8:30 (permanent link with all tables will be here).

HERE IT IS: As they say, “That’s why they play the game.” It looks disappointing on the surface, but we’ll dig in shortly:

Total nonfarm payroll employment edged up by 103,000 in March, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in manufacturing, health care, and mining.

Household Survey Data

In March, the unemployment rate was 4.1 percent for the sixth consecutive month, and the number of unemployed persons, at 6.6 million, changed little.

Among the major worker groups, the unemployment rates for adult men (3.7 percent), adult women (3.7 percent), teenagers (13.5 percent), Whites (3.6 percent), Blacks (6.9 percent), Asians (3.1 percent), and Hispanics (5.1 percent) showed little or no change in March.

… The labor force participation rate, at 62.9 percent, changed little in March, and the employment-population ratio held at 60.4 percent.

… Establishment Survey Data

Total nonfarm payroll employment edged up by 103,000 in March, following a large gain in February (+326,000). In March, employment grew in manufacturing, healthcare, and mining.

In March, employment in manufacturing rose by 22,000, with all of the gain in the durable goods component. Employment in fabricated metal products increased over the month (+9,000). Over the year, manufacturing has added 232,000 jobs; the durable goods component accounted for about three-fourths of the jobs added.

In March, health care added 22,000 jobs, about in line with its average monthly gain over the prior 12 months. Employment continued to trend up over the month in ambulatory health care services (+16,000) and hospitals (+10,000).

Employment in mining increased by 9,000 in March, with gains occurring in support activities for mining (+6,000) and in oil and gas extraction (+2,000). Mining employment has risen by 78,000 since a recent low in October 2016.

Employment in professional and business services continued to trend up in March (+33,000) and has risen by 502,000 over the year.

Retail trade employment changed little in March (-4,000), after increasing by 47,000 in February. In March, employment declined by 13,000 in general merchandise stores, offsetting a gain of the same size in February. Over the year, employment in retail trade has shown little net change.

In March, employment in construction also changed little (-15,000), following a large gain in February (+65,000).

Employment changed little over the month in other major industries, including wholesale trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in March. In manufacturing, the workweek edged down by 0.1 hour to 40.9 hours; overtime edged down by 0.1 hour to 3.6 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.7 hours.

In March, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $26.82. Over the year, average hourly earnings have increased by 71 cents, or 2.7 percent. Average hourly earnings for private-sector production and nonsupervisory employees increased by 4 cents to $22.42 in March.

The change in total nonfarm payroll employment for January was revised down from +239,000 to +176,000, and the change for February was revised up from +313,000 to +326,000. With these revisions, employment gains in January and February combined were 50,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 202,000 over the last 3 months.

So only 53,000 more people were working in March than were working in February (seasonally adjusted). That’s not impressive.

Not seasonally adjusted results: Here they are —

NSAandSApayrolls0114thru0318

The reported seasonally adjusted numbers actually understate the underlying weakness of the raw numbers by 92,000 and 60,000 in total nonfarm and the private sector, respectively:

NSAvsSAanalysis040618

Again, not impressive at all.

What’s also not impressive is the BLS’s roller coaster, which doesn’t make intuitive sense. A weak January followed by a fantastic February followed by an absolutely miserable March? That doesn’t make sense. The economy isn’t in that kind of stop-and-go mode, which makes one question not only the seasonal adjustments, but whether the raw job additions are being reported on a timely basis.

That said, the monthly average during the first quarter of 202,000 is quite acceptable — as long as March’s raw additions were really an anomaly resulting from a February overstatement.

More shortly.

UPDATE (reference is to seasonally adjusted numbers unless otherwise indicate):

  • Further supporting the idea that February was juiced and made March look bad, the Household Survey’s labor force in March contracted by 158K after almost 1.4 million people joined it in January and February, and employment contracted by 37K after growing by nearly 1.2 million during the previous two months. Give me a break.
  • The black unemployment rate has been under 7.0 percent in three of the past four months.
  • The BS continues in full-time employment, which supposedly dropped by 311K in March, while part-timers increased by 310K. Over the quarter, FT is up 711K, and PT is up 601K.
  • The fully-loaded unemployment rate dropped to 8.0 percent, which ties a 10-year low seen in October and November. The last time it came in below 8.0 percent was the 7.9 percent reported in December 2006.
  • Goods-producing industries have added a disproportionate 121,000 jobs in the past two months (about 16 percent of all private-sector employment, and 29 percent of the jobs added).
  • Hourly earnings in March came in up by 2.7 percent from March 2017, but weekly earnings were up by 3.3 percent, thanks to a longer average workweek.

Overall: A terrible March, but a quite acceptable quarter. Let’s hope that BLS merely shifted too much good news into February, and that March wasn’t a genuine sign of weakness.

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4 Comments

  1. Since ObamaCare wasn’t fully repealed, is it possible that the 29 hour definition of full time employment is still having a dampening effect? This impacts business decisions on hiring on the health insurance coverage issue. Or did they Administratively up the full time hourly amount? IF not, we need to lobby the Trump admin to correct this oversight.

    Comment by dscott — April 7, 2018 @ 9:38 am

  2. I think the 29-hour rule may be a factor. Don’t recall if that was hard-wired into the law or a reg interpretation. If the latter, it needs to go.

    Comment by Tom — April 8, 2018 @ 2:49 pm

  3. The Not in Labor Force #s are still essentially flat lined since Jan 2017:

    https://data.bls.gov/timeseries/LNS15000000

    The Dec YOY increase during the Obubbler (feckless incompetent) years was around a million people per year cumulatively.

    Nonfarm employment and labor force data, not seasonally adjusted

    https://www.bls.gov/regions/mid-atlantic/data/xg-tables/ro3fx9585.htm

    Indicates total unemployment has dropped by a million people since Trump took office, YOY January.

    Both the Labor Force and Employment # reflect about 2 million more people working, YOY January. (i.e. 1 million unemployed plus 1 million graduates)

    Which all indicates something really fascinating has happened here. IF 4 million graduate high school and college each year (by inference 4 million people turn 16 each year increasing the pool of potential workers to be counted), why don’t the stats reflect that annual occurrence?

    So what happened to the 3 million? 2.7 million died on an annual basis (2015 data)

    https://www.cdc.gov/nchs/fastats/deaths.htm#

    Meaning, the approx. 3 million graduates filled the jobs of those retiring, disabled and dying. Which may explain why the NOT in Labor Force # has flat lined, we have achieved a balance.

    Which brings us to SNAP to see how deep we have to dig into the backlog of people who have been wrongfully sidelined by Obumbler’s illegals first policy.

    SNAP Date updated to Jan 2018.

    https://fns-prod.azureedge.net/sites/default/files/pd/34SNAPmonthly.pdf

    As of Jan 2018 there are 40,739,084 people receiving SNAP benefits in 20,379,606 households. Inference being there are 20 million adults heading up those households and 20 million children. There is an approx. 1 million drop in adults from the program YOY January.

    From the Data shown, Oct 2014 – 22,783,765 households (i.e. adults) to January 2017 – 21,111,302 households, a drop of 1.6 million over 3 years.

    Comment by dscott — April 10, 2018 @ 4:48 pm

  4. Referring to a previous post here at Bizzyblog on historical SNAP #s:

    https://www.statisticbrain.com/food-stamp-statistics/

    After Welfare Reform that number bottomed out around 17 million people total, approx. 8 million adults. The potential pool of available working adults would be around (20 – 8) 12 million that need to come back to the work force.

    Mark Zandi needs to explain why 12 million adults and their children must be left behind for achieve his full employment proclamation.

    Comment by dscott — April 10, 2018 @ 5:39 pm

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