Nonfarm Payrolls +192,000, Unemployment Rate Steady at 6.7%; Economy Poised to Accelerate?

Initial Reaction

Nonfarm Payrolls rose by 192,000 nearly matching the Bloomberg Consensus expectation of 200,000. Revisions to January and February added another 37,000 jobs. Private employment, which excludes government jobs, surpassed the pre-recession peak for the first time.

Beneath the surface, this was a solid report for a change as the household survey shows a strong gain in employment of 476,000.

March BLS Jobs Statistics at a Glance

• Nonfarm Payroll: +192,000 - Establishment Survey
• Employment: +476,000 - Household Survey
• Unemployment: +27,000 - Household Survey
• Involuntary Part-Time Work: +225,000 - Household Survey
• Voluntary Part-Time Work: +189,000 - Household Survey
• Baseline Unemployment Rate: +0.0 at 6.7% - Household Survey
• U-6 unemployment: +0.1 to 12.7% - Household Survey
• Civilian Non-institutional Population: +173,000
• Civilian Labor Force: +503,000 - Household Survey
• Not in Labor Force: -331,000 - Household Survey
• Participation Rate: +0.2 at 63.2 - Household Survey

Additional Notes About the Unemployment Rate

• The unemployment rate varies in accordance with the Household Survey, not the reported headline jobs number, and not in accordance with the weekly claims data.
• In the past year the population rose by 2,253,000.
• In the last year the labor force rose by 1,128,000.
• In the last year, those "not" in the labor force rose by 1,134,000
• Over the course of the last year, the number of people employed rose by 2,349,000 (an average of 195,000 a month)

The population rose by over 2 million, but the labor force rose half as much. People dropping out of the work force accounts for much of the declining unemployment rate.

March 2014 Employment Report

Please consider the Bureau of Labor Statistics (BLS) March 2014 Employment Report.

Total nonfarm payroll employment rose by 192,000 in March, and the unemployment rate was unchanged at 6.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment grew in professional and business services, in health care, and in mining and logging.

Click on Any Chart in this Report to See a Sharper Image

Unemployment Rate - Seasonally Adjusted



Nonfarm Employment January 2003 - March 2014



click on chart for sharper image

Private Employment January 2003 - March 2014



click on chart for sharper image

Nonfarm Employment Change from Previous Month by Job Type



Hours and Wages

Average weekly hours of all private employees rose 0.2 hours to 34.5 hours. Average weekly hours of all private service-providing employees rose 0.2 hours to 33.3 hours.

Average hourly earnings of private workers fell $0.02 to $20.48. Average hourly earnings of private service-providing employees fell $0.04 to $20.25.

For further discussion of income distribution, please see What's "Really" Behind Gross Inequalities In Income Distribution?

Birth Death Model

Starting January, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I keep 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 add the charts back.

Table 15 BLS Alternate Measures of Unemployment



click on chart for sharper image

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 6.7%. 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 12.7%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Labor Force Factors

1. Discouraged workers stop looking for jobs
2. People retire because they cannot find jobs
3. People go back to school hoping it will improve their chances of getting a job
4. People stay in school longer because they cannot find a job
5. Disability and disability fraud

Were it not for people dropping out of the labor force, the unemployment rate would be well over 9%.

Synopsis

This was a solid jobs report. Weather-related effects were taken back and then some. The only negatives were falling hourly wages and a rise in involuntary part-time employment. Finally, if people start looking for jobs, further declines in the unemployment rate will be difficult to come by, even if job reports are generally favorable.

Economy Poised to Accelerate?

Is the economy out of the woods and poised to accelerate? I don't think so. Global imbalances are still growing, Europe is generally a basket case and China is due for a rather hard landing.

I did not believe the widely-held China decoupling theory in 2007, and I do not believe the widely-held US decoupling theory today.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com