March jobs report: yet another strong showing for jobs and unemployment; while strong wage growth nevertheless likely lags inflation
Here are the three main trends I was most interested in this month:
1. Is the pace of job growth beginning to decelerate?
2. Is wage growth holding up? Is it accelerating?
3. Are the leading indicators in the report beginning to flag?
The answers were:
1. The 6 month average of monthly gains, which was running at 585,000 in the prior 6 months, increased by 2,000 in March to 587,000, although, pending revisions – which have almost all been upward in the past year – this month’s number was the lowest in the last 6 months.
2. Wage growth, which averaged 5.9% in the 2nd half of 2021, for the 2nd month in a row has been up 6.7% YoY. Aside from April 2020, this is the highest wage growth in *40 years.*
3. A majority of the leading indicators within the report were positive. There is no sign yet of any major impending slowdown in the economy, particularly in the goods-producing sector.
We still have 1.579 million jobs to go, or 1.0%, to equal the number of employees in February 2020 just before the pandemic hit. At the current average rate for the past 6 months, that’s 3 more months.
Here’s my in-depth synopsis of the report:
- 431,000 jobs added. Private sector jobs increased 426,000. Government jobs increased by 5,000 jobs. The alternate, and more volatile measure in the household report indicated a gain of 736,000 jobs, which factors into the unemployment and underemployment rates below.
- U3 unemployment rate declined -0.2% to 3.6%, just 0.1% above the January 2020 low of 3.5%.
- U6 underemployment rate declined -0.3% to 6.9%, equaling the January 2020 low of 6.9%.
- Those not in the labor force at all, but who want a job now, rose 382,000 to 5.737 million, compared with 4.996 million in February 2020.
- Those on temporary layoff declined -101,000 to 787,000.
- Permanent job losers declined -191,000 to 1,392,000.
- January was revised upward by 23,000. February was also revised upward by 72,000, for a net gain of 95,000 jobs compared with previous reports.
Leading employment indicators of a slowdown or recession
These are leading sectors for the economy overall, and will help us gauge whether the strong rebound from the pandemic will continue. These were mainly positive:
- the average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, rose +0.1 hours to 41.7 hours.
- Manufacturing jobs increased 38,000. Since the beginning of the pandemic, manufacturing has still lost -128,000 jobs, or -1.0% of the total.
- Construction jobs increased 19,000. All of the jobs lost during the pandemic, plus another 4,000, have now been made up.
- Residential construction jobs, which are even more leading, fell by 2,600. Since the beginning of the pandemic over 50,000 jobs have been gained in this sector.
- temporary jobs rose by 4,900. Since the beginning of the pandemic, almost 250,000 jobs have been gained.
- the number of people unemployed for 5 weeks or less increased by 158,000 to 2,289,000, which is 164,000 higher than just before the pandemic hit.
- Professional and business employment increased by 102,000, which is about 700,000 above its pre-pandemic peak.
Wages of non-managerial workers
- Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $0.11 to $27.06, which is a 6.7% YoY gain.
Aggregate hours and wages:
- the index of aggregate hours worked for non-managerial workers rose by 0.1%, which is a loss of -0.7% since just before the pandemic.
- the index of aggregate payrolls for non-managerial workers rose by 0.5%, which is a gain of 11.7% (before inflation) since just before the pandemic.
Other significant data:
- Leisure and hospitality jobs, which were the most hard-hit during the pandemic, rose 112,000, but are still -1,474,000, or -8.7% below their pre-pandemic peak.
- Within the leisure and hospitality sector, food and drink establishments added 61,300 jobs, and is still -819,900, or -6.6% below their pre-pandemic peak.
- Full time jobs increased 912,000 in the household report.
- Part time jobs increased 101,000 in the household report.
- The number of job holders who were part time for economic reasons increased by 35,000 to 4,170,000, which is still below their level before the pandemic began.
This was another very good jobs report. There is no sign of any significant slowdown in hiring at this point. Leading sectors like manufacturing, construction, and temporary help continued to improve. Also, wage gains among non-supervisory workers continued to rise sharply. Aside from 3 months in 2019 and 2020, the unemployment rate was the lowest (or equal to it) in over 50 years. Similarly, the underemployment rate was the lowest for its entire 28 year history except for two months.
There were a few blemishes, most notably the decrease in residential construction jobs (more evidence of a housing slowdown) and the likely real, inflation-adjusted decline in aggregate payrolls, which means that probably real aggregate payrolls for the American working class have only risen by 1% or less in the last year in total.
Two months ago, I wrote that “Because real sales and income have not improved in over half a year, I expect the pace of job gains to slow considerably in the coming months.” For the second month in a row, I have been wrong – and happily so! But I continue to think job gains will slow (but not reverse) shortly.