March 2012 Employment Report

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According to the Bureau of Labor Statistics (BLS) non-farm payroll employment rose by 120,000 in March, and the unemployment rate dropped by 0.1 percentage point to 8.2 percent. Employment rose in manufacturing, food services and drinking places, and health care, but was down in retail trade. Government employment shrank by 1,000 (primarily at the local level). The change in total nonfarm payroll employment for January was revised down from +284,000 to +275,000, and the change for February was revised up from +227,000 to +240,000.
 

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As we have been pointing out for quite some time, employment is converging with the previous peak at a slower pace than any prior recession going back to 1973. The economy still has 5.2 million fewer jobs than at the January 2008 peak, a level previously seen in February 2009 and March 2005.
 

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The number of people not in the labor force rose by 333,000 in March, after falling by 310,000 in February; the March level is a new all-time high and is the primary explanation for why the unemployment rate dropped. The ratio of employed persons to the entire population continues to move sideways.
 

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The civilian labor force participation rate (the share of the population 16 years and older working or seeking work) retreated to 63.8 percent, from February’s 63.9 percent. At the same time, the annual percentage increase in average hourly earnings of production and non-supervisory employees ticked higher, to 1.76 percent (0.1 percentage point higher than in February). With the price index for urban consumers rising at a 2.9 percent annual pace, wages are falling in real terms (i.e., wage increases are not keeping up with price inflation).
 

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Full-time employment increased by 882,000 at the same time part-time employment fell by 447,000. The declining trend for part-time employment appears to be strengthening; so, too, is the upward trend in full-time employment (especially if viewed from January 2010).

Taken at face value, this employment report is about what we expected.