March Employment Report

Today’s employment report from the BLS was truly disappointing. Most economists had predicted reasonably strong employment growth, of at least 200,000. But it turns out that the US economy only generated half that number of new jobs in March.


Total nonfarm payroll employment increased by 110,000 in March, and the unemployment rate declined to 5.2 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.

Household Survey Data:
Total employment and the employment-population ratio were about unchanged in March at 140.5 million and 62.4 percent, respectively. The civilian labor force participation rate was 65.8 percent for the third straight month…

Establishment Survey Data:
Total nonfarm payroll employment increased by 110,000 in March to 132.9 million, seasonally adjusted. Industries with over-the-month job gains included construction, mining, health care, and wholesale trade.

As has been typical over the past year, employment growth in the private sector seems to be unable to even keep up with population growth, and is nowhere near to fast enough to make up the ground lost during the recession of 2001-02. The following chart illustrates:

(Note that the bumps in the population line come from periodic baseline revisions to the BLS data, based on new Census data.)

The most disappointing part about the US economy’s poor job creation right now is that we may well be pretty much at the peak of economic growth for this business cycle; most economists forecast growth in the US to slow gradually from 2004’s pace over the next two years… and those economists who think hard about the US’s necessary current account adjustment (are you surprised that I was able work that subject into this post?) suspect that the economy may slow more than just gradually sometime over the next year or two. If this is the best job creation that the US economy can do when growth is relatively strong, what will the labor market look like as the US economy slows?