Revisions
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.
Initial Reaction
Today’s establishment survey shows jobs rose by 103,000. The household survey (Table A) shows employment fell by 37,000. Once again there are wild swings and divergences between the two surveys.
The Econoday consensus estimate was +175,000 jobs in a range of 112,000 to 225,000.
One has to wonder if last month’s whopping 326,000 establishment survey report was an outlier.
Let’s dive into the details in the BLS Employment Situation Summary, unofficially called the Jobs Report.
BLS Jobs Statistics at a Glance
- Nonfarm Payroll: +103,000 – Establishment Survey
- Employment: -37,000 – Household Survey
- Unemployment: -121,000 – Household Survey
- Involuntary Part-Time Work: -141,000 – Household Survey
- Voluntary Part-Time Work: +338,000 – Household Survey
- Baseline Unemployment Rate: +0.0 to 4.1% – Household Survey
- U-6 unemployment: -0.2 to 8.0% – Household Survey
- Civilian Non-institutional Population: +163,000
- Civilian Labor Force: -158,000 – Household Survey
- Not in Labor Force: +323,000 – Household Survey
- Participation Rate: -0.1 to 62.9– Household Survey
Employment Report Statement
Payroll employment edges up by 103,000 in March; unemployment rate unchanged at 4.1%. Total nonfarm payroll employment edged up by 103,000 in March, and the unemployment rate was unchanged at 4.1 percent. Employment increased in manufacturing, health care, and mining.
Unemployment Rate – Seasonally Adjusted
The above Unemployment Rate Chart is from the BLS. Click on the link for an interactive chart.
Nonfarm Employment Change from Previous Month
Nonfarm Employment Change from Previous Month by Job Type
Hours and Wages
Average weekly hours of all private employees were steady at 34.5 hours. Average weekly hours of all private service-providing employees were steady at 33.3 hours. Average weekly hours of manufacturers dropped 0.1 hour 40.9 hours.
Average hourly earnings of private workers rose $0.04 to $22.42. Average hourly earnings of private service-providing employees rose $0.05 to $22.15. Average hourly earnings of manufacturers rose $0.04 to $21.36.
Year-over-year earnings of private employees are up 2.4%. Wage inflation remains benign.
For a discussion of income distribution, please see What’s “Really” Behind Gross Inequalities In Income Distribution?
Birth Death Model
Starting January 2014, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will comment further.
Table 15 BLS Alternate Measures of Unemployment
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
Notice I said “better” approximation not to be confused with “good” approximation.
The official unemployment rate is 4.1%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 8.0%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Some of those dropping out of the labor force retired because they wanted to retire. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.
Strength is Relative
It’s important to put the jobs numbers into proper perspective.
- In the household survey, if you work as little as 1 hour a week, even selling trinkets on eBay, you are considered employed.
- In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.
- In the payroll survey, three part-time jobs count as three jobs. The BLS attempts to factor this in, but they do not weed out duplicate Social Security numbers. The potential for double-counting jobs in the payroll survey is large.
Household Survey vs. Payroll Survey
The payroll survey (sometimes called the establishment survey) is the headline jobs number, generally released the first Friday of every month. It is based on employer reporting.
The household survey is a phone survey conducted by the BLS. It measures unemployment and many other factors.
If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.
Looking for jobs on Monster does not count as “looking for a job”. You need an actual interview or send out a resume.
These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.
Final Thoughts
The average of February and March reports (326,000 and 103,000 respectively) is still a healthy 214,500. Then again, February was wildly high all the way back to July of 2016.
It’s difficult to take a strong position here other than wait and see. Jobs are a lagging indicator.
Mike “Mish” Shedlock
Toys R Us was stocking up!
Why is rail traffic at an all time high? Intermodal Rail traffic had it’s best march ever, thats ever you fools.
Looks like the only sector to take a hit was construction. Eight years of cheap and easy obama bucks created a MASSIVE housing bubble. As this deflates with higher interest (from near ZERO) rates, DJT new tax laws and QE unwind – there is going to be loss in this vastly inflated sector.
should read we are now entering the tipping point
However, it is likely that employment will fall next month for the first time if the JOLTS figure and claim figures are correct. I am not surprised by the 223,000 difference in the February and March figures and I assume a similar fall for April. Higher interest rates, stock market gyrations and trade war jitters are trumping the Trump illusion of higher growth due to tax cuts blah blah. We are not entering the tipping point. Mish, you were absolutely right that the FED would not persevere with rate rises.