March jobs report: leading sectors turn down, pre-recessionary report still quite positive

March jobs report: leading sectors turn down in a pre-recessionary, but still quite positive, report

 – by New Deal democrat

Unsurprisingly, my focus on this report, like the last few reports, was on whether residential construction jobs turned negative or not, whether manufacturing and temporary jobs continued on their downward trajectory, and whether the deceleration in job growth would be apparent.

Some of the deceleration or decline occurred, particularly in the sectors which lead the market overall, while other metrics held steady or even improved, consistent with a still very tight market.

Here’s my in depth synopsis.

HEADLINES:

• 236,000 jobs added, the lowest number since December 2020. Private sector jobs increased 189,000, also the lowest since December 2020. Government jobs increased by 47,000. The three month moving average of growth declined 1,000 to 345,000. 
• The alternate, and more volatile measure in the household report rose by 577,000 jobs. The above household number factors into the unemployment and underemployment rates below.
• U3 unemployment rate declined -0.1% to 3.5%.
• U6 underemployment rate also declined -0.1% to 6.7%.
• January was revised downward by -32,000, and February was revised upward by 15,000, for a net decrease of -17,000 jobs compared with previous reports. 

Leading employment indicators of a slowdown or recession

These are leading sectors for the economy overall, and help us gauge how much the post-pandemic employment boom is shading towards a downturn.  These were mixed, but the overall tenor was neutral to negative:

• the average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, declined was unchanged at 40.7, down -0.9 hours from February peak last year of 41.6 hours.

• Manufacturing jobs declined by -1,000.
• Construction jobs declined for the first time since January 2022, by -9,000.
• Residential construction jobs, which are even more leading, increased by only 800, but last month’s gain of 1,200 was revised to a loss of -2,400, suggesting January may have been the peak for this sector.

• Temporary jobs, which have generally been declining late last year, resumed that decline, by -10,700.
• the number of people unemployed for 5 weeks or less declined -17,000 to 2,272,000.

Wages of non-managerial workers

• Average Hourly Earnings for Production and Nonsupervisory Personnel increased $.09, or +0.3%, to $28.50, a YoY gain of 5.1%, the lowest YoY gain since July of 2021.

Aggregate hours and wages: 

• the index of aggregate hours worked for non-managerial workers rose 0.2%.
•  the index of aggregate payrolls for non-managerial workers rose 0.4%, but continued its deceleration to 7.2% YoY, the lowest since March 2021, although still more than 1% higher YoY than inflation as of the last reading.

Other significant data:

• Leisure and hospitality jobs, which were the most hard-hit during the pandemic, rose 72,000, only -368,000, or -2.2% below their pre-pandemic peak.
• Within the leisure and hospitality sector, food and drink establishments added 50,300 jobs, and are now only -75,000, or -0.6% below their pre-pandemic peak. 
• Professional and business employment rose 39,000. This series has also been decelerating consistently, and is now up 2.3% YoY, the lowest increase since March 2021.
• The Labor Force Participation Rate increased 0.1% to 62.6%, vs. 63.4% in February 2020.
• The number of job holders who were part time for economic reasons rose 35,000.
• Those not in the labor force at all, but who want a job now, declined -178,000 to 4.925 million, its lowest level since December 2019.

SUMMARY

As it is so often, this report had a somewhat bifurcated nature. It remained solid in terms of absolute job growth. Further, in general the numbers derived from the Household Survey were very good. But most of the leading internals in the Establishment report were negative.

Let me highlight the leading negatives. All 3 leading sectors of the jobs market have turned down: manufacturing, construction, and temporary jobs. Also, while the manufacturing workweek was unchanged this month, it is at a level which in the past has been consistent with a recession. The drumbeat of negative revisions to prior reports has also resumed. This is solidly pre-recessionary.

But let’s not overlook the positives in the Household Survey. Both the unemployment and underemployment rates declined, and participation increased. Jobs are obviously still easy to get, as those out of the labor force who nevertheless want a job declined to a 3+ year low, and indeed except for 2019, the lowest number since 2008. And while aggregate payroll growth is decelerating, it is still growing at a rate higher than inflation.

To sum up: pre-recessionary, but we aren’t at the recession yet.

February jobs report shows decelerating trend continuing, Angry Bear, New Deal democrat